X 


'•  PUBS.I 


IN  THE  MATTER 


OF  THE 


FORFEITURE  OF  THE  AUTOMATIC  TELEPHONE  SYSTEM 


OF  THE 


CHICAGO  TUNNEL  COMPANY 


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0 
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OPINION 

RENDERED  THE  COMMITTEE  ON  GAS,  OIL  AND 

ELECTRIC  LIGHT  OP  THE  CITY  COUNCIL 

OF  THE  CITY  OF  CHICAGO 


By 
STEPHEN  A.  FOSTER 

Special  Counsel  for  the  Committee 


TABLE  OF  CONTENTS. 

Page 
OPINION. 

Introductory 1,2 

City  Council  can  legally  forfeit  franchise  and  property 3,  4 

Forfeiture   clauses    5, 0 

Natural  meaning  of  the  words  employed fi 

"Equity   abhors   a   forfeiture" 7-0 

The  issue   stated 9, 10 

The  principles  of  construction  to  be  borne  in  mind 10 

Municipal  license  strictly  construed  against  grantee 10-14 

Rnle  against  forfeiture  not  applied  when  forfeiture  for  public 
benefit , .  14-16 

Correct  construction  of  clauses  (a)    and   (b) 16-18 

Contention  by  counsel  that  20.000  subscribers  must  be  secured  in 
one  day  10,  20 

Great  significance  attached  by  counsel  to  the  word  "also" 20-24 

Alleged  inability  of  company  to  perform  conditions  of  ordinance..  24-26 

Effect  of  Chicago  Telephone  ordinance  of  1907 26 

Contention  that  the  clauses  amount  to  a  bet 27,  28 

City  will  get  plant  and  equipment  of  company  for  telephone  pur- 
poses   28-32 

Conclusion 32-35 

ADDENDUM. 

Introductory 37,  3-8 

The  Tunnel  Company  has  in  effect  abandoned  its  effort  to  comply 
with  the  requirements  of  its  ordinances 38-40 

The  Tunnel  Company  by  its  agreement  to  sell  out  to  the  Bell  inter- 
ests violated  the  terms  of  the  1899  ordinance  and  rendered  com- 
petition inoperative  40-43 

Conclusion 44 

DRAFT  OF  ORDINANCE. 

Recitals 45-52 

Sections  1  and  2  declaring  defaults 52,  53 

Section  3  declaring  forfeiture  of  right  to  do  business 53,  54 

Section  4  declaring  forfeiture  of  plant  and  equipment 54 

Section  5  making  demand  for  surrender  of  plant  and  equipment.  .54,  55 

Section  6,  demand  on  Tunnel  Company  for  space  for  carrying  on 
telephone  business  55 

Section  7.  Commissioner  of  Public  Works  directed  to  deliver  copies 
of  ordinance  to  parties  interested 55,  56 

Section  8,  Corporation  Counsel  directed  to  take  any  necessary  action 
in  court  56 

Section  9,  invalidity  of  any  part  not  to  affect  other  parts 56 

Section  10,  ordinance  to  take  effect  upon  publication 56 


CASSODAY  BUTLER   LAMB  &  FOSTER 

L-AwveR  s 

RUSH  C.  BUTLER 

W.LUAM   E.   LAMB  •    M  O  N  AO  N  O  C  K   B  LO  C  K 

STEPHEN   A.    FOSTER  CHICAGO 

C.   R.   HILLY6R 

ERNEST  o.  BEST 

CORNELIUS   LYNDE 

July  1,  1915. 

Hon.  Leicis  D.  Sitts,  Chairman,  and  Members   of  the 
Committee  on  Gas,  Oil  &  Electric  Light, 
City  Hall,  Chicago. 

IN  THE  MATTER  OF  THE  FORFEITURE  OF  THE  AUTOMATIC 
TELEPHONE  SYSTEM  OF  THE  CHICAGO  TUNNEL  COMPANY. 

GENTLEMEN  : 

At  the  meeting  of  the  Committee  held  Thursday,  June 
24th,  1915,  a  motion  was  passed  requesting  me  specifically 
to  answer  questions  ]  and  3  that  had  been  propounded 
by  his  Honor,  the  Mayor,  to  Mr.  Walter  L.  Fisher  and 
by  your  Committee  to  me  in  your  letter  of  June 
21st.  I  was  by  the  action  of  the  Committee  on  June 
24th  excused  from  replying  to  the  other  three  questions 
propounded  to  Mr.  Fisher  and  which  may  be  described 
generally  as  questions  of  policy  and  was  requested  to 
direct  my  attention  particularly  to  the  legal  questions  in- 
volved in  any  action  that  might  be  taken  by  the  City 
Council  for  the  forfeiture  of  the  Automatic  Telephone 
System  of  the  Chicago  Tunnel  Company. 

The  preparation  of  this  opinion  on  the  two  legal  ques- 
tions propounded  to  me  has  involved  the  examination  of 
all  of  the  printed  and  typewritten  briefs  and  opinions 
submitted  to  this  Committee  by  the  former  Corporation 
Counsel  and  by  the  attorneys  for  the  Chicago  Tunnel 
Company  and  its  bondholders,  and  the  examination  of  a 


very  large  number  of  legal  decisions,  some  of  which  are 
cited  in  this  opinion  and  the  footnotes  thereto. 

In  the  very  limited  time  at  my  disposal,  owing  to  con- 
stant engagements  in  court  since  the  date  of  my  being 
retained  in  this  matter,  I  have  been  unable  to  examine 
the  voluminous  records  of  the  previous  hearings  before 
this  Committee,  but  I  assume  that  the  discussions  there- 
in contained  relate  for  the  most  part  to  questions  of  pol- 
icy and  that  my  examination  of  the  printed  and  type- 
written opinions  above  referred  to  have  sufficiently  ad- 
vised me  of  all  legal  contentions  made  in  opposition  to 
the  possible  forfeiture  of  the  Tunnel  Company's  fran- 
chises and  property.  The  eminence  of  the  attorneys  who 
have  rendered  these  opinions  and  their  well  known  dili- 
gence justify  this  assumption  on  my  part  and  my  exami- 
nation of  the  authorities  confirms  me  in  the  belief  that 
these  attorneys  have  stated  the  case  against  the  right  to 
forfeit  as  strongly  as  it  can  be  stated. 

I  have  therefore  devoted  special  consideration  to  the 
positions  taken  by  them  and  have  sought  to  determine 
whether  or  not  their  conclusions  are  justified  by  the 
weight  of  legal  authority.  I  have  not  had  as  much  time 
to  devote  to  an  examination  of  the  authorities  as  I 
might  have  desired,  but  my  examination  has  progressed 
sufficiently  to  convince  me  of  the  controlling  force  of  the 
principles  upon  which  I  rely  and  the  authorities  which 
I  cite. 

First  Question. 

Referring  then  to  the  questions  to  which  you  particu- 
larly directed  my  attention,  I  would  say  in  answer  to  the 
first  question  which  reads  as  follows: 


WHETHER  THE  CITY  COUNCIL  CAN  LEGALLY  FORFEIT  THE 
TELEPHONE  FRANCHISES1  AND  TELEPHONE  PROPERTY  OF  THE 
CHICAGO  TUNNEL  COMPANY? 

that  my  conclusion  is : 

THAT  IT  CAN  so  FORFEIT  SUCH  TELEPHONE  FRANCHISES 

AND    TELEPHONE    PROPERTY. 

In  the  former  Corporation  Counsel's  opinion  of  Oc- 
tober 2nd,  1914,  addressed  to  you,  it  is  stated : 

"It  may  be  considered  as  established  by  the  au- 
thorities that  if  an  ordinance  granted  by  a  city  to  a 
public  service  company  authorizing  such  company  to 
use  the  streets  of  the  city  for  the  installation  of  its 
equipment  and  the  operation  of  its  system,  express- 
ly provides  in  clear  and  unequivocal  terms  for  for- 
feiture of  the  rights  granted  by  the  ordinance  upon 
the  failure  of  the  company  .to  comply  with  the  condi- 
tions specified  in  the  ordinance,  then  such  rights 
may  be  forfeited  if  the  company  fails  to  comply 
with  the  conditions  specified."2 


'His  Honor,  the  Mayor,  uses  the  word  "franchise"  in  the  question  pro- 
pounded to  Mr.  Fisher  in  the  sense  that  such  word  is  often  used  as 
designating  privileges  and  rights  to  the  use  of  streets  conferred  by  a 
municipality.  The  word  "franchise"  however  has  a  legal  meaning  of  a 
somewhat  different  nature  and  for  example  applies  to  the  powers  of  a 
corporation  derived  from  the  sovereign  authority,  that  is  from  the 
state.  In  considering  cases  involving  grants  of  privileges  or  rights  in 
the  use  of  streets  given  by  municipalities  to  private  corporations  the  Illi- 
nois courts  frequently  make  a  distinction  between  the  franchise  of  the 
private  corporation  as  obtained  from  the  state,  namely  its  charter,  and 
the  privileges  which  are  given  by  the  ordinance.  The  latter  privilege  is 
ximkcn  of  as  a  license,  which,  on  acceptance  by  the  private  corporation 
tn  irliich  the  (jrant  is  made,  become*  a  contract  bcticecn  the  municipal- 
ity and  the  private  corporation. 
See: 

Chicago  City  Raihcay  Co.  v.  People,  73  111.,  541,  548. 

Chicago  Municipal  Gas  Light  Co.  \.  Town  of  Lake,  130  111.,  42,  55. 

City  of  Belleville  v.  Citizens'  Horse  Railway  Company,  152  111., 
171,  185. 

City  of  Chester  \.  Wabfuh,  Chester  rf  Western  Railroad  Com- 
pany, 182  111.,  382,  :!v.(. 

l'«,plc  v.  Central  I  nion  Tel.  Co.,  lf>2  111..  307.  311. 

Citu  of  Chicago  v.  Rothschild  rf  Co.,  212  111.,  590. 

"In  snpixu't  of  the  proposition  above  quoted  the  former  Corporation 
(Yinnsfl  cited  the  following  authorities : 

City  of  liellcrillc  v.  Railiraii  Compaiu/,  152  111..  171. 

Blo<-];i  v.  People,  220  111..  444. 

People  v.  Central  Union  Tel.  Co.,  232  111.,  2fiO. 


The  former  Corporation  Counsel's  opinion  goes  on  to 
set  forth  the  several  ordinances  which  have  been  granted 
to  the  predecessor  of  the  Chicago  Tunnel  Company,  the 
Illinois  Telephone  &  Telegraph  Company.  A  summary 
of  these  ordinances  is  set  forth  below.3 


Wheeling,  etc.  R.  R.  Co.  v.  TriadelpMa,  58  W.  VM.,  487. 
Union  St.  Ry.  Co.  v.  Snow.  113  Mich.,  694. 
Pacific  R.  R.  Co.  v.  Lcarm  worth,  1  Dill.,  393. 

To  these  may  lie  added  the  following  authorities  among  many  others : 
Wliitiiif/  v.   1  illage  of  Ncic  Baltimore.  127  Mich..  <i<>. 
('it//  of  Detroit  \.  Peoples'  Telephone  Co.,  135  Mich.,  GOO. 
People  v.  Broadiraii  Railroad  Co.  of  Brooklyn,  126  New  York,  29. 
City  of  Tower  v.  Tower  d-  Soudan  Railway  Co.,  (is  Minn.,  r.nu. 

38  L.  R.  A.,  541. 
Farns  worth  v.  Minnesota   Railroad   Company,  92  TJ.    S..  4!»,  ±". 

Lawyers'  Edition,  530. 

Atlantic  d  Pacific  Railroad  Co.  v.  Minoua,  165  U.  S.,  413. 
Palestine  Water  cC-  Power  Co.  v.  Palestine,  91  Texas,  540,  40  L.  R. 

A.,  203. 
St.  Cloud  v.  Water  Light  &  Power  Co.,  88  Minn.,  329,  92  N.  W., 

1112. 
State  v.  Light  &  Development  Company,  246  Mo.,  618. 

The  first  ordinance  granted  to  the  Illinois  Telephone  &  Telegraph  Co. 
passed  February  20,  1899,  gave  permission  and  authority  to  construct 
and  operate  in  the  streets  of  the  City  of  Chicago  a  line  of  conduits 
and  wires  for  a  telephone  system  during  a  period  of  30  years.  Said  ordi- 
nance prohibited  any  sale  or  agreement  by  which  competition  would 
become  inoperative  and  provided  that  a  certain  percentage  of  the  gross 
receipts  of  the  telephone  system  be  paid  to  the  city  as  compensation 
for  the  privileges  conferred.  Section  5  provided  that  on  certain  con- 
ditions the  company  would  forfeit  to  the  city  all  rights  acquired  under 
the  ordinance  together  with  its  plant,  wires,  poles  and  conduits  then  in 
the  streets.  The  condition  of  this  forfeiture  was  the  failure  of  the 
company  to  have  in  operation  within  five  years  from  date  of  the  ordi- 
nance a  telephone  exchange  serving  2,000  telephones  of  bona  fide  sub- 
scribers. 

By  the  ordinance  of  July  15,  1903,  said  company  was  granted  permis- 
sion and  authority  to  construct  and  operate  in  and  through  tunnels 
already  constructed  under  the  terms  of  the  ordinance  of  February  20, 
1899,  or  which  would  thereafter  be  constructed  under  said  ordinance 
of  July  15,  1903,  for  and  during  the  term  of  the  ordinance  of  Febru- 
ary 20,  1899,  not  only  wires  and  electrical  conductors  as  provided 
in  said  last  mentioned  ordinance  but  also  any  appliances  or  apparatus 
for  the  transmission  or  transportation  of  newspapers,  mail  matter,  pack- 
ages, parcels  or  merchandise.  This  ordinance  contained  provision  for 
the  payment  of  compensation  to  the  city  for  the  privileges  conferred  of  a 
certain  percentage  of  the  gross  receipts  from  the  transportation  business. 
Section  4  gave  to  the  company  authority  to  lease  space  in  the  tunnels  to 
such  persons  or  corporations  as  might  be  designated  by  the  city.  This 
ordinance  was  amended  in  minor  changes  in  phraseology  by  the  ordi- 
nance of  July  20,  1903,  passed  five  days  later. 

Section  11  of  the  above  ordinance  of  July  15,  1903,  provided  that  the 
company  should  under  certain  conditions  forfeit  all  rights  acquired  under 
said  ordinance  together  with  its  plant  and  equipment  for  transporta- 
tion purposes  and  that  under  certain  conditions  the  company  should 
forfeit  to  the  city  all  rights  acquired  under  said  ordinance  of  February 


THE  FORFEITURE  CLAUSES. 

As  the  former  Corporation  Counsel  points  out,  the 
provision  of  the  ordinances  which  is  of  most  importance 
for  our  consideration  is  that  portion  of  Section  11  of  the 
ordinance  of  July  15th,  1903,  as  amended  June  28,  1909, 
and  which  provides  that  the  company  shall  forfeit  all 
rights  acquired  under  the  ordinance  of  February  20th, 

20,  1899.  together  with  its  plant  and  equipment  for  telephone  pur- 
poses. On  February  1,  1909,  Section  11  was  amended  by  ordinance 
passed  on  that  date  and  on  June  28,  1909,  another  amendment  to  Section 
11  was  made  by  ordinance  passed  on  the  latter  date. 

Section  11  of  said  ordinance  of  July  15,  1903,  as  finally  amended  by 
said  ordinance  passed  June  28,  1909,  and  which  has  continued  in  force 
and  effect  until  the  present  time  is  in  part  as  follows : 

"Section  11.  If  said  company,  its  successors  and  assigns,  shall  fail 
to  construct  or  shall  cease 'to  operate  fifty  (50)  miles  of  such  tun- 
nels within  ten  years  from  the  time  this  ordinance  goes  into  effect, 
then  and  in  that  case  said  company,  its  successors  and  assigns, 
shall  also  forfeit  to  the  city  all  rights  acquired  under  this  ordi- 
nance, together  with  its  plant  and  equipment,  for  transportation  pur- 
poses then  installed ;  and  if  said  company,  its  successors  and  assigns, 
shall  fail  to  construct,  equip  and  install  a  telephone  system  under 
the  terms  of  said  ordinance  to  said  company  of  February  20,  1899, 
adequate  for  the  services  of  20,000  subscribers  prior  to  June  1,  1911, 
or  if  at  any  time  after  said  June  1,  1911,  said  company,  its  suc- 
cessors and  assigns  shall  not  have  in  operation  or  shall  cease  to 
operate  a  telephone  system  serving  20,000  bona  fide  subscribers,  then 
and  in  each  such  case  said  company,  its  successors  and  assigns,  shall 
also  forfeit  to  the  city,  or  to  any  licensee  or  grantee  of  the  city 
(designated  or  authorized  by  the  city  for  this  purpose),  all  rights 
acquired  under  said  ordinance  of  February  20,  1899,  together  with 
its  plant  and  equipment  for  telephone  purposes,  and  shall  forthwith 
turn  over  the  ownership  and  possession  of  said  plant  and  equipment 
to  the  city,  or  to  any  licensee  or  grantee  of  the  city  (designated 
or  authorized  by  the  city  for  this  purpose),  and  shall  be  under  obli- 
gations to  furnish  the  city,  or  to  any  licensee  or  grantee  of  the 
city  (designated  or  authorized  by  the  city  for  this  purpose)  without 
charge,  all  space  in  any  or  all  of  its  tunnels  and  conduits  necessary 
for  the  carrying  on  of  said  telephone  business;  such  space  at  no  time 
to  be  less  than  that  required  to  reasonably  accommodate  equipment 
for  the  service  of  20,000  telephone  subscribers ;  provided,  however, 
that  nothing  herein  contained  shall  impair  the  obligation  of  said 
company  under  said  ordinance  of  February  20,  1899,  to  construct 
and  have  in  operation  within  five  (5)  years  from  the  date  of  said 
ordinance  of  February  20,  1899,  a  telephone  exchange  serving  two 
thousand  (2,000)  telephones,  or  shall  vary  the  provisions  of  for- 
feiture therein  contained  except  as  herein  expressly  provided.  *  *  * 
This  ordinance,  so  far  as  it  conflicts  with  or  varies  from  the  provi- 
sions of  the  said  ordinance  of  February  20,  1S99,  or  of  said  ordinance 
of  July  15.  1903.  or  of  said  ordinance  of  July  20.  1903.  or  of  said 
ordinance  of  February  1,  1!KH>.  shall  be  taken  and  construed  as  and 
is  iicn-liy  declared  to  be  amendatory  of  said  ordinances,  respec- 
tively." 


1899  (the  ordinance  «Tantini»  the  right  to  establish  a  tele- 
phone system),  together  with  the  plant  and  equip- 
ment for  telephone  purposes : 

(a)  "if  said  company,  its  successors  and  assigns 
shall  fail  to  construct,  equip  and  install  a  telephone 
system  under  the  terms  of  said  ordinance  to  said 
company  of  February  20th,  1899,  adequate  for  the 
service  of  20,000  subscribers    prior    to    June    1st, 
1911," 

or 

(b)  "if  at  any  time  after  said  June  1st,  1911,  said 
company,  its  successors  and  assigns  shall  not  have 
in  operation  or  shall  cease  to  operate  a  telephone 
system  serving  20,000  buna  fide  subscribers 


*  *  *  •>  i 


THE  NATURAL,  MEANING  OF  THE  WORDS  EMPLOYED. 

After  thus  accurately  stating  the  issue  presented  the 
former  Corporation  Counsel  proceeds  to  discuss  the 
proper  interpretation  of  the  language  employed  and 
states : 

"If  this  clause  be  interpreted  in  accordance  with 
what  we  consider  to  be  the  most  natural  meaning  of 
the  words  employed,  the  context  also  being  consid- 
ered, it  would  in  our  opinion  mean  that  the  grantee 
company,  its  successors  and  assigns,  shall  forfeit  to 
the  city  all  rights  acquired  under  said  ordinance  of 
February  20th,  1899  (the  telephone  system  grant), 
together  with  its  plant  and  equipment  for  telephone 
purposes,  if  at  any  time  after  June  1st,  1911,  said 
company  did  not  have  in  operation  a  telephone  sys- 
tem serving  20,000  bona  fide  subscribers  whose  sub- 
scription contracts  were  in  force  and  who  had  in- 
struments and  wires  in  their  residences  or  places  of 
business  at  all  times  ready  for  their  use." 


"THE    LAW    DOES    NOT    FAVOR  AND    EQUITY    ABHOKS    A 

FORFEITURE.  ' ' 

The  former  Corporation  Counsel  comes  to  the  con- 
clusion, however,  that,  in  spite  of  the  fact  that  according 
to  his  view  this  is  the  more  reasonable  interpretation  of 
the  language  of  the  ordinance,  such  interpretation  would 
not  be  adopted  by  the  courts  if  the  matter  were  pre- 
sented to  the  courts,  because  of  the  well  known  doc- 
trine ''that  the  law  does  not  favor,  and  equity  abhors  a 
forfeiture. '  '4 

Counsel  for  the  bondholders  in  an  opinion  dated  June 
2nd,  1914,  submitted  to  me  adopts  a  similar  line  of 
reasoning.  In  this  opinion  counsel  states  after  refer- 
ring to  the  forfeiture  clauses  above  quoted : 

"I  think  that  in  all  candor  it  must  be  admitted 
that  if  this  language  were  contained  in  a  clause  ex- 
pressing a  condition  precedent  or  if  it  were  in  an 
ordinary  contract  which  did  not  contain  provisions 
for  the  forfeiture  of  rights  and  confiscation  of  prop- 
erty, the  adjective  phrase  'serving  20,000  bona  fide 
subscribers'  would  be  interpreted  to  define  the  sub- 
stantive term  which  it  qualifies  'a  telephone  sys- 
tem,' as  one  which  had  20,000  bona  fide  subscribers 
whose  subscription  contracts  were  in  force  and 
which  had  instruments  and  wires  in  the  residences 
or  places  of  business  of  such  subscribers  at  all  times 
ready  for  their  use.  * 

But  the  counsel  for  the  bondholders  as  does  the  former 
Corporation  Counsel,  holds  that  the  doctrine  that  "the 
law  does  not  favor  and  equity  abhors  a  forfeiture"  pro- 
hibits the  adoption  of  this  interpretation  of  the  lan- 
guage which  counsel  for  the  bondholders,  also,  admits  is 
the  more  natural  interpretation. 


'.fin-nit*  \.  .s'/""'W'".'/.  71  Wisconsin,  177.  1HO,  cited  by  tbe  Corporation 
Counsel  in  support:  of  the  above  doctrine.  \v;is  a  case  involving  the  con- 
struction of  a  inii'<it<  coiitnn  t  for  conveyance  of  real  estate. 

The  quotation  of  the  Corporation  Counsel  from  17  Am.  &  Kng.  Knc.  of 
Law,  1'nd  Kdition.  page  is,  is  taken  from  an  article  on  interpretation  and 
construction,  which,  as  is  said  at  the  beginning  of  said  article  under 
the  heading  "seoj>e  of  title,"  treats  particularly  of  instruments  inter 

/;</,/r.v,    xildl    nn   dccilll   Utld   COHtl'ttCtlt. 


Counsel  for  the  bondholders    further    states    in    his 
opinion : 

"To  avoid  this  very  consequence  (that  is  a  for- 
feiture) the  courts  have  established  the  rule  that  if 
the  words  of  a  forfeiture  clause  or  penal  ordinance 
are  susceptible  of  two  meanings  that  meaning  must 
be  chosen  which  avoids  the  forfeitures  or  penalty.5 


5In  support  of  the  above  proposition  Mr.  Shaw  in  his  brief  cites  a  large 
number  of  authorities.  It  is  believed,  however,  that  these  cases  are  dis- 
tinguishable from  the  present  situation  and  that  the  rule  applied  therein 
is  not  properly  applicable  to  this  situation.  The  cases  of 

Voris  v.  Ren  show,  49  111.,  425,  431-5. 

('nine  \.  Hyde  Park,  135  Mass.,  147. 

Gage  v.  School  District,  64  New  Hampshire,  232,  234, 

French  v.  Inhabitants  of  Quincy,  3  Allen,  9,  13, 

Carter  v.  Branson,  79  Ind.,  14, 

llailcu  v.  Wells,  47  N.  W.,  988,  989  (Iowa). 

Rose  v.  Han-lei/,  118  New  York,  502,  518, 

Jackson  v.  Silver  Nail,  15  Johnson,  278, 

Waldron  \.  Toledo  A.  A.  &  G.  T.  Railway  Co.,  55  Mich.,  420, 
all  involve  the  construction  of  a  deed  or  lease  of  real  estate,  which  pro- 
vided for  a  reversion  on  the  happening  of  some  condition  subsequent. 
These  cases  were  all  matters  of  private  contract  and  none  of  them  in- 
volved the  construction  of  a  grant  of  privileges  or  rights  by  the  public  to 
a  private  corporation. 
The  cases  of 

Chicago  &  Alton  Railroad  Company  v.  People,  67  111.,  11,  2G  to  27, 

City  of  Chicago  v.  Runipff,  45  111.,  90. 

Diversey  v.  Smith,  103  111.,  378,  390, 

.1.  T.  d  8.  F.  Railway  Company  v.  People,  227  111.,  270,  278, 

Manhattan  Trust  Company  v.  Davis,  23  Montana,  273,  279. 

Philadelphia  v.  Costcllo,  17  Pennsylvania  Superior,  339,  340, 

Truman    v.    Casks    of    Gunpowder,    Thacher's    Criminal    Cases 

(Mass.),  14, 

all  involve  the  construction  of  statutes  or  ordinances  which  provide 
penalties  for  the  doing  of  acts  declared  to  be  unlawful.  In  all  of  these 
cases  the  forfeiture  was  of  a  punitive  nature  for  the  doing  of  an  unlaw- 
ful act.  The  forfeiture  provision  in  the  ordinance  under  consideration  is 
nut  a  /nniitire  provision  for  the  doing  of  fin  unlawful  act,  l>ut  is  a  provi- 
sion to  enforce  performance  of  the  company's  contractual  obligation.  The 
attorneys  for  the  Company  at  page  13  of  their  brief  on  the  "Conse- 
quences of  a  Declaration  of  Forfeiture,"  state  that  the  real  purpose  of 
i  lie  clause  here  under  discussion  was  the  "recalling  of  a  grant  the  con- 
ditions of  which  had  not  been  fulfilled." 

Tlie  rule  of  construction  against  forfeiture  applies  to  criminal  statutes 
find  to  statutes  and  ordinances  providing  penalties  for  violations  of  law 
but  these  cases  are  not  analogous  to  the  present  situation. 

Two  other  cases  cited  by  Mr.  Shaw  are  Mill  Creek  Toirnship 
v.  E.  R.  T.  T.  Railroad  Company,  216  Pennsylvania  State,  and  State  v. 
Boyce,  43  Ohio  State,  46.  The  former  Mr.  Shaw  did  not  cite  as  directly 
bearing  on  the  rule  of  construction  and  nothing  was  said  in  the  opinion 
of  the  court  about  this  rule.  In  the  latter  case  the  court  referred  to  the 
rule  that  equity  abhors  a  forfeiture  and  applied  it  to  the  question  there 
involved  of  whether  the  delay  in  commencing  work  within  the  time  re- 
quired, was  excused  by  reason  of  injunction  proceeding  instituted  by  the 
city  solicitor.  Here  then  the  court  was  really  construing  the  conduct 
of  the  city  and  not  the  words  of  the  franchise  or  ordinance. 


Of  course  1  do  not  mean  that  a  forfeiture  will  be 
avoided  by  ^unreasonably  straining  the  meaning  of 
the  words  employed.  The  words  must  be  suscep- 
tible of  that  construction  without  violence,  and  yet 
it  will  be  seen  by  an  examination  of  the  authorities 
that  where  the  line  is  to  be  drawn  depends  upon  the 
particular  cases.  Where  the  injustice  is  manifest 
the  courts  seem  to  stop  at  nothing  in  the  application 
of  this  rule  of  construction." 

Counsel  for  the  Company  also  rely  upon  this  doc- 
trine.6 

THE  ISSUE  STATED. 

I  have  referred  at  considerable  length  to  the  opinions 
of  the  Corporation  Counsel,  the  counsel  for  the  bond- 
holders and  the  counsel  for  the  Company  in  order  to  de- 
fine as  accurately  as  possible  the  issues  that  are  pre- 
sented in  this  connection  and  to  eliminate  the  discussion 
of  unnecessary  questions. 

It  is  admitted  by  all  that  the  power  of  forfeiture  exists 
provided  the  language  of  the  forfeiture  clause  is  plain 
and  unambiguous.  The  test  laid  down  by  counsel  for 
the  bondholders  when  he  says  that: 

U0f  course  I  do  not  mean  that  a  forfeiture  will 
be  avoided  by  unreasonably  straining  the  meaning 
of  the  words  employed."  ''The  words  must  be  sus- 
ceptible of  that  construction  (that  is  the  construc- 
tion avoiding  the  forfeiture)  without  violence"  to 
the  meaning  of  the  words, 


"In  the  opinion  of  Messrs.  Schuyler,  Kttelson  &  Weinfeld,  the  following 
cases  were  cited  in  support  of  the  doctrine  that  forfeitures  are  not 
favored : 

low  v.  Rcnshair,  49  111.,  425,  432. 

Palmer  v.  Ford,  70  111.,  309,  377. 

Mnnxon  v.  Hraydon,  159  111.,  61,  65. 

St.  Louis,  Jacksonville  d  Chicago  Railroad  Co.  v.  Mathers,  71  111., 

592,   597. 

Tin-so  cases  all  involve  the  construction  of  deeds  or  leases  to  real  estate 
1>H  \voen  private  parties  and  did  not  involve  the  construction  of  a  grant 
l>y  the  public  to  a  private  corporation.  The  rule  contended  for  b]/ 
roiiHxd  in  Hint  itiiiiii'ui  /.v  undtmhtcdl)/  applicable  to  cases  of  private  grant 
innl  iirirnti  i-ntitrurt  hut  ire  believe  the  same  rule  is  not  applicable  with 
anything  like  the  same  strictness  to  public  grants  or  contracts  in  which 
the  public  gives  privileges  and  rights  in  public  property  to  prirate  cor- 
porations. 


10 

is  in  my  view  a  correct  statement  of  the  principles  with 
which  we  have  to  deal.  If  the  forfeiture  clause  has  two 
interpretations  equally  reasonable,  the  one  authorizing 
a  forfeiture  and  the  other  interpretation  not  authoriz- 
ing a  forfeiture,  undoubtedly  that  interpretation  which 
avoids  the  forfeiture  would  be  the  one  adopted  by  the 
court.  But  if,  on  the  other  hand,  as  counsel  states,  the 
interpretation  avoiding  the  forfeiture  involves  "unrea- 
sonably straining  of  the  words  employed"  and  cannot 
be  arrived  at  "without  violence"  to  the  ordinary  mean- 
ing of  the  words,  then  the  doctrine  that  the  law  does  not 
favor  and  equity  abhors  a  forfeiture  would  not  go  so 
far  as  to  require  the  adoption  of  such  strained  and  vio- 
lent interpretation  of  the  words  employed. 

THE  PRINCIPLES  OF  CONSTRUCTION  TO  BE  BORNE  IN  MIND. 

In  any  attempt  to  arrive  at  the  correct  interpretation 
of  the  forfeiture  clauses,  there  are  two  principles  of  law 
in  addition  to  that  above  cited  and  relied  upon  to  such 
a  marked  extent  by  counsel  who  have  heretofore  dealt 
with  this  question  which  ought  to  be  considered,  and 
those  are  the  well  recognized  principles : 

FIRST  PRINCIPLE. 

That  the  law  will  construe  the  grant  of  a  fran- 
chise or  license  by  a  municipality  in  favor  of  the  munici- 
pality and  against  the  grantee.  This  principle  of  strict 
construction  of  municipal  grants  has  been  recognized  by 
the  courts  of  all  jurisdictions  and  in  a  great  variety  of 
cases.7 


7In  Hlwki  v.  People,  220  111.,  444,  an  ordinance  had  granted  to  a  street 
railway  company  the  authority  to  construct  tracks  on  certain  of  the 
streets  in  the  City  of  Chicago  with  the  condition  that  within  two  years 
after  the  date  of  said  ordinance  a  single  track  line  should  be  put  in 
operation  and  within  five  years  a  double  track  line  should  be  com- 
pleted. For  failure  to  perform  this  condition  the  privileges  under  the 


11 

Of  the  cases  bearing-  on  this  principle  cited  below,  I 
would  call  attention  particularly  to  the  leading  authority 
in  this  state  of  Blocki  v.  People,  220  111.,  444,  a  case  in- 

ordinance  were  to  cease  and  terminate  unless  such  delay  was  excused. 
The  railway  company  had  laid  its  tracks  on  some  of  the  streets  hut 
had  failed  to  complete  its  construction  on  certain  other  streets  within 
the  five  year  period.  It  applied  to  the  Commissioner  of  Public  Works 
for  a  permit  to  allow  the  construction  on  certain  streets  included  within 
the  grant  and  said  permit  was  refused  on  the  ground  that  the  time 
within  which  the  privileges  were  to  be  exercised  had  elapsed.  The  rail- 
way company  sought  to  mandamus  the  Commissioner  of  Public  Works  to 
issue  such  permit  and  set  up  as  an  excuse  for  the  failure  to  complete  the 
construction  within  the  time  specified  the  fact  that  an  injunction  had 
been  issued  against  the  construction  of  the  tracks  on  one  of  the  streets 
contained  in  the  grant.  It  was  the  contention  of  the  railway  company 
that  the  ordinance  was  to  be  construed  as  granting  the  right  to  construct 
a  single  system  and  that  anything  which  caused  delay  in 
the  construction  of  any  part  thereof  would  excuse  the  con- 
struction on  any  other  of  the  streets  covered  by  said  ordi- 
nance. The  ordinance  was  open  to  this  interpretation  or  to 
the  interpretation  that  tracks  should  be  laid  on  all  of  the  streets  as 
fast  ;is  possible  and  delay  in  the  construction  would  be  excused  only  on 
those  particular  streets  which  were  affected  by  the  injunction  against 
laying  tracks.  The  first  interpretation  would  prevent  a  forfeiture ;  the 
second  interpretation  would  result  in  the  loss  to  the  railway  company 
of  its  privileges  under  the  ordinance.  The  Supreme  Court  held  that 
the  latter  interpretation  was  the  proper  construction  of  the  ordinance 
in  question  and  in  so  holding  referred  to  the  rule  that  ordinances  grant- 
ing rights  in  certain  states  are  to  be  construed  most  strictly  against 
the  grantee  and  in  favor  of  the  public.  Quotations  from  the  opinion  of 
the  court  in  this  case  are  set  out  above. 

The  case  of  Citji  of  Chester  v.  W abash,  Chester  and  Western  Railroad 
Company,  182  111.,  382,  adopted  the  same  rule  when  it  held  in  favor  of  the 
city  in  an  action  of  ejectment  to  recover  possession  of  the  city  streets 
after  the  expiration  of  an  ordinance  granting  to  the  defendant  the  right 
to  lay  tracks  on  those  streets  for  a  period  of  twenty  years.  The  court 
said : 

"The  right  granted  by  a  city  council  to -a  railroad  company  to  lay 
its  tracks  in  a  street  and  operate  its  cars  thereon  is  not  a  franchise 
but  a  property  right  merely  contractual,  and  subject  to  the  same  con- 
ditions, restrictions  and  limitations  as  an;/  other  property  owned  by 
other  persons.     And  such  contract  rights,  so  far  as  they  affect  the 
iniblic,  are  to  be  strictly  construed  in  faror  of  the  public."     p.  389. 
In  Chicago  v.  Oalc  Park  Elerated  Company,  2fil  111.,  478,  492,  the  court 
said : 

"Ordinances  granting  the  right  to  construct  and  operate  a  street 
railway    system    are    to    be    construed    most    strictly    against    the 
grantee." 
In  Turnpike  Co.  v.  People  of  Illinois,  96  V.  S.,  03.  the  court  said : 

•  Grants  of  franchises  and  special  privileges  are  always  to  be  con- 
strued most  strongly  afiaimt  the  donee  and  in  faror  of  the  pub- 
lic." 

In  Coosair  Mining  Co.  v.  State  of  South  Carolina,  144  V.  S.,  r».TO,  the 
court  bad  before  it  the  construction  of  a  mining  grant  on  which  the 
question  was  raised  as  to  whether  It  gave  a  perpetual  or  limited  grant. 
It  was  held  that  the  latter  was  the  proper  construction  on  the  rule  that 
such  grants  should  IK-  construed  strictly  against  the  grantee.  At  page 
562  the  court  said : 

"If  the  Act  of  1876  is  fairly  susceptible  of  either  of  the  construe- 


12 

volving  the  interpretation  of  an  ordinance  granted  by 
the  City  of  Chicago  to  a  street  railway  company  for  the 
laying  of  its  tracks  in  a  number  of  streets.  There  were 

tions  we  have  indicated,  as  we  think  it  is,  the  interpretation  must 
be  adopted  which  is  most  favorable  to  the  state.  The  doctrine  is 
firmly  established  that  only  that  which  is  granted  in  clear  and  ex- 
plicit terms  passes  by  a  grant  of  property,  franchises  or  privileges 
in  which  the  government  or  the  public  has  an  interest.  Rice  v.  Minne- 
sota &  N.  W.  R.  Co.,  66  U.  S.,  1  Black,  358,  380  (17,  147,  153)  : 
NorthiOestern  Fertilizing  Co.  v.  Hyde  Park,  97  U.  S.,  666  (24:  1038)  ; 
Hannibal  &  St.  J.  R.  Co.  v.  Missouri  River  Packet  Co.,  125  U.  S.,  271 
(31 :  735)  ;  Central  Transp.  Co.  v.  Pullman  Palace  Car  Co.,  139  U.  S., 
24,  49  (35 :  55,  64)  ;  Stein  v.  Bienville  Water  Supply  Co.,  141  U.  S., 
<rr,  80  (35:  622,  627)  ;  State  v.  Pacific  Guano  Co.,  22  S.  C.,  50,  83,  86. 
*  *  *  This  principle,  it  has  been  said,  'is  a  wise  one,  as  it  serves 
to  defeat  any  purpose  concealed  l)y  the  skilful  use  of  terms  to  ac- 
complish something  not  apparent  on  the  face  of  the  Act,  and  thus 
sanctions  only  open  dealing  with  legislative  bodies'  Slidell  v.  Grand- 
jean,  111  U.  S.,  412,  438  (28:  321,  330)." 

The  case  of  People  v.  Broadway  Railroad  Company  of  Brooklyn,  126 
New  York.  29,  involved  an  action  to  have  the  franchise  of  the  defendant 
forfeited  for  non-user.  The  railroad  company  was  given  the  right  to  lay 
its  tracks  upon  various  streets  and  it  was  required  that  the  tracks  be 
laid  as  soon  as  the  streets  were  opened  and  graded.  Upon  failure 
to  comply  with  the  condition  of  the  act  it  was  provided  that  all  rights 
and  privileges  thereunder  should  be  forfeited.  This  act  was  open  to  two 
possible  interpretations :  the  one,  insisted  upon  by  the  railroad  company, 
that  it  did  not  require  the  company  to  build  any  part  of  the  system  until 
all  of  the  streets  were  opened  and  graded ;  the  other,  insisted  upon  by  the 
city,  that  it  required  the  railroad  company  to  lay  its  tracks  upon  such 
streets  as  were  opened  and  graded  and  to  extend  the  system  as  soon  as 
other  streets  were  opened  and  graded.  In  the  lower  court  the  interpre- 
tation urged  by  the  railroad  company  was  adopted  (see  56  Hun.,  45)  but  on 
appeal  it  was  held  that  the  latter  construction  of  the  act  was  the  proper 
one  and  the  franchise  of  the  defendant  railroad  company  was  declared 
forfeited  for  failure  to  construct  its  tracks  as  provided  by  the  act.  In 
rendering  this  decision  the  court  states  at  length  the  rule  of  strict  con- 
struction against  the  grantee  when  the  public  has  granted  privileges  or 
franchises  to  private  corporations. 
The  court  says  at  page  36: 

"The  act  of  1860  was  obtained  by  the  defendant  or  in  its  interest. 
It  may  be  assumed  that  the  language  therein  contained  was  the 
language  chosen  by  it  to  define  the  rights  arid  franchise  which  it 
sought  by  the  act.  As  the  act  conveyed  to  it  franchises  and  special 
privileges  its  language  must  be  construed  most  favorably  to  the  peo- 
ple and  all  reasonable  doubts  in  construction  must  be  solved  against 
the  defendant.  Words  and  phrases  which  are  ambiguous  or  admit 
of  different  meanings  arc  to  receive  in  such  cases  that  construction 
which  is  most  favorable  to  the  public.  *  *  *  The  act  must  now 
lie  construed  as  the  courts  would  have  construed  it  if  it  would  have 
come  in  question  soon  after  its  passage.  The  defendant  cannstt  claim 
a  liberal  or  enlarged  construction  of  the  act  to  shield  itself  against  a 
forfeiture  alleged  to  have  been  voluntarily  incurred.  It  would  be 
quite  a  paradox  to  hold  that  it  could  enlarge  its  franchise  or  extend 
its  rights  by  exposing  them  to  condemnation  for  non-user.  The  lan- 
guage of  the  act  must  under  all  circumstances  and  in  all  proceedings 
and  actions  receive  the  same  construction  and  have  the  same  scope 
and  meaning.  But  while  the  act  is  to  be  strictly  construed  in  such 
a  case  the  conduct  under  the  act  which  is  claimed  to  constitute  the 


13 

was  more  favorable  to  the  grantee,  and  upon  such  inter- 
pretation depended  the  question  of  the  forfeiture  of  the 
privileges  granted. 

The  Supreme  Court  held  that  the  interpretation  of  the 
ordinance  authorizing  the  forfeiture  was  the  one  that 
should  be  adopted  and  in  support  of  their  conclusion 
cited  the  principle  of  strict  construction  to  which  I  have 
referred.  The  court  said: 

"We  agree  with  counsel  for  appellant  that  the 
grants  by  the  public  such  as  are  given  by  the  City 
of  Chicago  in  its  ordinance  are  to  be  construed 
most  strongly  against  the  grantee." 

forfeiture  of  the  corporate  rights  and  franchises  is  to  have  a  char- 
itable and  liberal  construction  like  any  conduct  tending  to  penal  con- 
sequences.   In  considering  such  conduct  courts  will  lean  against  for- 
feitures and  the  doctrine  that  courts  are  reluctant  to  enforce  for- 
feitures can  have  no  other  application  than  this.'' 
If  there  were  any  doubt  or  ambiguity  as  to  whether  the  Chicago  Tun- 
nel Company  had  20,000  bona  fide  subscribers,  its  "conduct" — to  use  the 
phrase  in  this  case — would   receive  a  "charitable  and  liberal  construc- 
tion," but  there  is  no  doubt  as  to  the  "conduct"  of  the  Company.     It 
is  frankly  admitted  by  its  own  counsel  that  it  has  not  this  number  of 
bona  fide  subscribers. 

It  was  held  by  the  court  in  the  above  case  that  the  proper  construc- 
tion of  the  act  required  the  railroad  company  to  lay  its  tracks  upon 
streets  as  soon  as  any  part  of  the  street  was  opened  and  graded.  The 
court  further  said : 

"But  even  if  it  were  absolutely  certain  that  the  defendant  could 
have  made  no  profit  by  building  the  roads  to  the  extent  which  we 
have  indicated,  yet  that  is  no  answer  to  the  proposition  that  it  is  the 
duty  of  the  defendant  to  build  them." 

This  case  involves  the  construction  of  a  forfeiture  clause  con- 
tained in  an  act  granting  to  a  private  corporation  rights  and  privileges 
in  the  city  streets  and  seems  closely  analogous  to  the  present  situa- 
tion. 

In  Cumberland  Gas  Lit/lit  Co.  v.  W.  Va.  d  Mart/land  Gas  Co.,  188  Fed.. 
585,  at  page  589  the  court  cites  the  leading  case  on  this  proposition  of 
Cliarlcs  Hirer  liridf/e  Co.  \.  Warren  Krirtac  Co.,  11  Pet..  420,  viz.,  that 
legislative  acts  granting  franchises  to  private  corporations  are  to  be 
construed  strictly  according  to  their  terms.  The  court  then  says: 

"In  Rose's  notes  on  this  case  (Vol.  3,  p.  081).  it  is  said  touching 
this  rule  'it  may  be  questioned  whether  the  Supreme  Court  has  ever 
laid  down  a  more  military  doctrine  than  the  principle  here  announced 
and  the  cases  which  follow  show  how  firmly  it  has  become  embedded 
in  our  jurisprudence.' 

And  more  than  100  cases  from  substantialli/  all  the  courts  of  this 
roiintr-u  in  support  of  this  statement  are  cited." 
See  also: 

Cleveland  v.  \orton,  HO  Mass.,  380. 
State  \.  St.  Paul  M.  A  M.  Itaihrait  Co..  08  Minn..  380. 
Ifoycrs  /'ark  Water  Co.  \.  Citii  of  Chicago,  131  III.  App.,  35. 
Kx  I'artc  Unwell,  1<>3  California,  008. 


14 

two  possible  constructions  of    this    ordinance,    one    of 
which  was  the  more  favorable  to  the  city  and  one  of  which 

And  again  in  the  same  opinion : 

"And  as  we  before  stated,  a  grant  similar  to  the 
one  at  bar  is  to  be  most  strongly  construed  against 
the  grantee  and  in  favor  of  the  public." 

The  facts  involved  in  this  case  are  set  out  below  in 
the  note,  containing  this  and  other  citations. 

Among  the  different  opinions  that  have  been  rendered 
in  this  matter  and  which  have  been  submitted  to  us  for 
examination,  only  one,  that  of  Messrs.  Fairleigh  &  Fair- 
Icigh,  mentions  this  rule  of  construction  here  referred 
to  and  it  is  contended  by  them  that  this  rule  simply  ap- 
plies when  the  question  under  consideration  is  the  ex- 
tent of  the  grant.  It  is  true  that  some  of  the  cases  do 
deal  with  the  extent  of  the  grant  in  laying  down  this 
principle  of  strictness  of  construction  against  the 
grantee;  but,  the  leading  case  in  this  state  that  of 
BlocJfi  v.  People,  as  I  have  already  stated,  was  a  case  of 
forfeiture  and  on  the  authority  of  this  case  and  of  other 
forfeiture  cases  cited  in  the  note  I  have  come  to  the  opin- 
ion that  this  rule  of  strict  construction  should  be  applied 
to  forfeiture  as  well  as  other  cases. 

SECOND  PRINCIPLE. 

The  other  principle  which  should  be  borne  in 
mind  in  seeking  to  arrive  at  a  correct  construction  of  the 
language  used  in  the  forfeiture  clauses  above  referred 
to  is  that  recognized  by  a  few  well  considered  cases 
holding  that  the  rule  above  stated  requiring  a  construc- 
tion of  an  ordinance  against  the  interpretation  author- 
izing a  forfeiture  will  not  be  followed  when  the  provi- 
sions authorizing  the  forfeiture  were  inserted  for  the 


15 

public  benefit  and  for  the  purpose  of  securing  the  per- 
formance of  a  service  in  which  the  public  is  interested.8 
In  Farnsworth  v.  Minnesota  &  Pacific  R.  R.  Co.,  92 
U.  S.,  49,  23  Lawyer's  Ed.,  530,  Mr.  Justice  Field  in 
delivering  the  opinion  of  the  Supreme  Court  of  the 
United  States  said: 

"But  it  is  said  that  provisions  for  forfeiture  are 
regarded  with  disfavor  and  construed  with  strict- 
ness and  that  courts  of  equity  will  lean  against  their 
enforcement.  This  as  a  general  rule  is  true  when 
applied  to  cases  of  contract  and  the  forfeiture  re- 
lates to  a  matter  admitting  of  compensation  or  resto- 
ration. But  there  can  be  no  leaning  of  the  court 
against  a  forfeiture  which  is  intended  to  secure  the 
construction  of  a  work  in  which  the  public  is  inter- 
ested where  compensation  cannot  be  made  for  the 
default  of  the  party,  nor  where  the  forfeiture  is  im- 
posed by  positive  law." 


8In  Farnsicorth  \.  Minnesota  cf  Pacific  Railroad  Co.,  92  U.  S.,  49, 
23  Lawyers'  Edition,  530,  the  State  of  Minnesota  had  granted  to  the 
defendant  railroad  aid  in  the  construction  of  its  road  hy  state  bond  issues. 
The  act  provided  that  the  railroad  company  complete  the  construction  of 
certain  parts  of  the  road  within  certain  specified  times  and  in  default 
thereof  that  all  the  property  and  the  franchise  of  the  said  railroad 
company  should  be  forfeited  to  the  state.  The  railroad  company  failed 
to  complete  the  construction  as  required  by  the  act  and  thereafter 
the  legislature  passed  an  act  creating  a  new  company  and  granting  to 
it  all  the  rights,  property,  franchise  and  interest  of  the  Minnesota  & 
Pacific  R.  R.  Co.  This  case  involved  the  construction  and  validity  of  the 
last  mentioned  enactment  and  the  court  held  that  the  legislature  might 
declare  a  forfeiture  upon  non-compliance  with  the  conditions  of  the 
grant.  It  was  strongly  urged  by  the  railroad  company  that  the  rule  of 
strict  construction  against  forfeiture  should  be  applied  and  the  act  so 
construed  as  to  prevent  the  forfeiture.  The  court,  however,  held  that 
in  the  construction  of  a  forfeiture  clause  inserted  to  secure  the  building 
of  a  work  in  which  the  public  was  interested  there  could  be  no  appli- 
cation of  the  rule  of  construction  against  forfeiture.  The  forfeiture  was 
upheld  on  considerations  of  public  policy. 

The  doctrine  laid  down  by  the  above  case  is  also  followed  in  the  case 
of  ('it H  of  Tower  v.  Tower  &  Soudan  Railway  Company,  68  Minn.,  500, 
where  the  court  had  before  it  the  construction  of  a  clause  in  the  city 
ordinance  providing  for  forfeiture  of  road  and  franchise  of  a  street  rail- 
way company  if  said  company  ceased  operation  for  a  period  of  one  year 
or  more.  The  court  in  discussing  the  question  of  Interpretation  of  the 
ordinance  and  in  declining  to  adopt  a  construction  against  forfeiture  uses 
the  language  quoted  from  Farnmcorth  v.  Minnesota,  supra. 
See  also: 

N'//« /•/,•*  v.  Liverpool  Water  Works  Co.,  13  Ves.  Jr.,  428. 

At1<iiiti<-  «{•  I'aciflc  Railroad  Company  \.  Min<iiix.  1(K>  U.  S.,  413. 

/  .  N.  v.  Orci/on  &  C.  Railroad  Co.,  lx<;  Fed.,  S(i1. 


16 

That  the  forfeiture  clause  in  the  ordinances  now  un- 
der consideration  was  inserted  for  the  purpose  of  se- 
curing the  construction  by  the  Chicago  Tunnel  Com- 
pany or  its  predecessor  of  a  public  work,  to-wit,  the  Au- 
tomatic Telephone  System,  and  the  maintenance  of  com- 
petitive telephone  service,  is  self-evident  and  the  public 
interest  was  directly  involved  in  securing  the  carrying 
out  of  these  purposes  by  the  grantee.  The  attorneys  for 
the  Company  admit  that  the  clause  was  inserted  for  the 
purpose  of  "recalling  a  grant  the  conditions  of  which 
had  not  been  fulfilled. ' '  See  note  5. 

THE  CORRECT  CONSTRUCTION  OF  CLAUSES  (A)  AND  (B). 

Bearing  in  mind  the  above  principles  relating  to  the 
proper  construction  of  such  a  franchise  or  license  as  is 
here  involved,  and  coming  to  a  consideration  of  the  exact 
language  employed  in  the  forfeiture  clauses,  it  is  most 
significant  that  the  forfeiture  provision  contains  two 
separate  clauses;  the  clauses  (a)  and  (b)  set  forth  in 
the  Corporation  Counsel's  opinion  and  quoted  above. 
Clause  (a)  has  to  do  with  the  adequacy  of  the  telephone 
system  to  be  constructed  by  the  grantee  prior  to  June 
1st,  1911.  The  grantee  was  required  to  construct,  equip 
and  install  a  telephone  system  adequate  for  the  service 
of  20,000  subscribers  prior  to  June  1st,  1911.  It  is  con- 
tended by  those  who  are  opposed  to  a  forfeiture  being 
declared  in  this  matter  that  clause  (b)  also  refers 
merely  to  the  adequacy  of  the  plant  and  that  it  simply 
requires  that  the  grantee  at  all  times  after  June  1st, 
shall  continue  to  have  in  operation  a  telephone  system 
sufficient  and  effective  for  the  service  of  20,000  subscrib- 
ers. Such  an  interpretation  of  clause  (b)  minimizes  the 
effect  of  such  clause  and  ignores  as  it  seems  to  me  the 
distinction  that  was  evidently  intended  by  those  who 


17 

drafted  this  ordinance  between   clause    (a)    and   clause 
(b).9 

Clause  (a)  as  already  stated  relates  to  adequacy  of 
plant.  Clause  (b)  relates  to  the  actual  operation  of  a 
plant  and  the  number  of  bona  fide  telephone  subscrib- 
ers which  such  plant  serves.  It  is  contended  that  the 
word  ''serving"  as  used  in  clause  (b)  means  "adequate 
or  sufficient  to  serve"  and  it  is  stated  that  definitions  of 
that  general  character  can  be  found  in  dictionaries  of 
recognized  authority.  But  it  is  not  denied  that  the  word 
"serving"  of  course  has  another  and  more  usual  mean- 
ing and  the  context  in  which  it  is  used  makes  it  clear  to 
me  that  when  the  words  "a  telephone  system  serving 
20,000  bona  fide  subscribers"  was  used  it  was  intended 
to  require  that  there  should  be  20,000  bona  fide  subscrib- 
ers enjoying  and  using  at  the  time  the  service  of  this 
telephone  system.  Telephone  service  is  a  phrase  too 
well  known  to  need  any  definition  or  explanation  from 
me.  Everv  one  knows  what  it  means. 


•In  Rothschild  v.  Xcic  York  Life  Insurance  Co.,  97  111.  App.,  547,  the 
court  had  before  it  for  construction  a  section  in  the  insurance  statute 
which  provided  in  substance  that  life  insurance  companies  "»»«;/  make  dis- 
tribution of  such  surplus"  and  in  the  next  sentence  said  that  in  determin- 
ing the  amount  of  the  surplus  "there  shall  be  reserved  an  amount  not 
less  than,"  etc.  It  was  contended  that  the  word  "may"  as  used  in  the 
first  sentence  quoted  should  be  construed  as  indicating  an  imperative 
duty,  that  is  to  say,  as  meaning  the  same  thing  as  though  the  word 
"sliair  had  been  used  there.  In  its  opinion  the  court  called  attention 
to  cases  in  which  the  word  "may"  had  been  construed  in  the 
sense  of  "shall."  but  it  refused  to  «/>/>///  to  the  icord  ";»«//"  the  imiiera- 
tin  nicdiiiiKj  irhen  that  word  teas  used  in  the  same  section  as  the  icord 
"xlnill"  and  the  tico  rcfctred  to  different  situations.  The  court  said 
at  page  555 : 

"Applying  these  rules  to  the  words  'may'  and  'shall'  in  Section  14, 
the  former  must  be  regarded  as  permissive  and  the  latter  as  impera- 
tive. We  can  conceive  of  no  good  reason,  nor  are  we  aware  of 
any  rule  of  interpretation  which  would  warrant  the  holding  that  the 
words  'may'  and  'shall'  are  used  in  the  same  sense  in  the  section, 
and  that  imperative." 

The  situation  in  the  above  case  is  somewhat  analogous  to  the  use  of  the 
phrase  "adequate  for  the  services  of  20,000  subscribers."  and  the  phrase 
"serving  20.000  bond  fide  subscribers"  as  used  in  the  Chicago  Tunnel  or- 
dinance. Them-  tiro  jihrases  are  used  in  the  same  section  and  refer  to 
riHiditionx  arixinn  <H  different  times.  Therefore,  it  is  clear  that  the  two 
phrases  using  different  language  did  not  mean  the  same  thing  and  tliar 
the  phrase  "serving  20,000  bona  fldc  subscribers"  does  not  mean  a  tele- 
phone system  merely  adequate  for  the  service  of  20,000  subscribers. 


18 

The  construction  contended  for  that  all  that 
this  clause  meant  was  that  the  telephone  system 
should  be  adequate  or  sufficient  to  serve  20,000 
subscribers  entirely  ignores  as  it  seems  to  me 
the  important  and  significant  words  "bona  fide/' 
which  qualify  subscribers  and  indicate  that  there 
should  be  actual  telephone  subscribers  having  con- 
tractual relations  with  the  telephone  company  entitling 
them  to  the  service  of  this  telephone  system.  It  is  most 
significant  that  these  words,  "bona  fide"  do  not  appear 
in  clause  (a)  which  deals  with  adequacy  or  size  of  the 
plant  and  merely  requires  that  the  plant  should  be  ade- 
quate to  serve  "20,000  subscribers"  if  obtained.  Nat- 
urally the  qualifying  words  "bona  fide"  were  not  here 
used  in  clause  (a).  When  defining  adequacy  there  is  of 
course  no  need  or  propriety  in  qualifying  the  word  "sub- 
scribers" by  the  adjective  "bona  fide."  The  plant 
should  be  adequate  to  serve  20,000  possible  subscribers. 
The  use  of  "bona  fide"  in  clause  (b)  distinguishes  it 
from  clause  (a)  and  shows  that  clause  (b)  does  not 
refer  to  mere  adequacy  of  plant. 

The  entire  clause  (b)  as  distinguished  from  clause  (a) 
relates  to  the  actual  operation  of  the  telephone  system 
and  not  to  the  mere  construction  of  an  adequate  plant. 
Clause  (a)  says  that  if  the  company: 

"shall  not  have  in  operation  or  shall  cease  to  oper- 
ate a  telephone  system  serving  20,000  bona  fide 
subscribers,  it  shall  forfeit  its  rights  under  the  ordi- 
nance of  February  20th,  1899,  together  with  its  plant 
and  equipment  for  telephone  purposes." 

To  give  this  clause  the  construction  contended  for  by 
counsel  would  as  it  seems  to  me  be  doing  the  very  thing 
which  counsel  for  the  bondholders  admits  is  not  per- 
missible. It  would  be  "unreasonably  straining  the  mean- 
ing of  the  words  employed"  and  would  do  "violence" 
to  the  language  of  the  ordinance. 


19 


THE    CONTENTION    THAT    ALL    THE    20,000    SUBSCRIBERS 
WOULD  HAVE  TO  BE  SECURED  IN  ONE  DAY. 

It  remains  for  me  to  discuss  a  number  of  special  con- 
siderations urged  by  counsel  for  the  company  or  for  the 
bondholders  in  support  of  the  interpretation  of  these 
forfeiture  clauses  for  which  they  contend.  Among  these 
I  find  that  it  is  contended  that  if  the  ordinance  is  con- 
strued in  the  manner  which  this  opinion  suggests  and 
which  it  has  been  stated  by  both  the  Corporation  Coun- 
sel and  one  of  the  counsel  for  the  bondholders  is  the 
more  natural  interpretation,  this  construction  would 
require  that  all  these  20,000  subscribers  must  have 
been  secured  on  June  1st,  1911.  Counsel  urge 
that  none  of  them  could  have  been  secured  before 
the  night  of  May  31,  1911,  and  that  at  all  times 
after  June  1st,  1911,  there  must  have  been  a  full  num- 
ber so  that  it  appears,  as  counsel  contends,  that  they 
must  have  all  been  secured  during  that  one  day.  We 
search  in  vain  for  any  basis  in  any  of  the  ordinances  for 
this  argument.  There  was  nothing  in  the  ordinances  to 
suggest  that  the  Illinois  Telephone  and  Telegraph  Com- 
pany, the  original  grantee,  was  to  postpone  securing  its 
subscribers  until  the  last  possible  moment  but  on  the 
other  hand  there  is  every  indication  in  the  ordinances 
that  the  Company  was  expected  and  required  to  use  at 
all  times  all  possible  diligence  to  build  up  its  number  of 
bona  fide  subscribers  during  the  period  of  years  inter- 
vening between  the  passage  of  the  1903  amendatory  or- 
dinance which  gave  the  company  notice  that  within  a  pe- 
riod of  five  years  from  the  date  of  the  ordinance  and  ex- 
piring July  15,  1908,  the  Company  must  have  20,000 
bona  fide  subscribers.  The  period  allowed  for  securing 
these  subscribers  was  subsequently  extended  by  the 
amendatory  ordinance  passed  February  1st,  1909,  to  Oc- 


20 

tober  8,  1IHH),  and  then  finally  fixed  by  the  further  amen- 
datory ordinance  of  June  28,  1909,  at  the  date  already 
referred  to  of  June  1st,  1911.  I  am  not  advised  as  to 
how  many  actual  subscribers  the  telephone  system  had 
on  any  one  of  the  dates  of  the  passage  of  these  several 
ordinances,  but  -an  examination  of  these  ordinances 
shows  that  the  Company  from  the  date  of  the  passage 
of  the  1903  ordinance  should  have  known  that  it  must 
within  a  certain  limited  period  secure  20,000  bona  fide 
subscribers  and  it  is,  to  my  mind,  a  strange  contention 
that  there  was  anything  in  the  ordinance  to  justify  the 
company's  waiting  until  the  night  of  May  31,  1911,  be- 
fore seeking  to  secure  any  subscribers  and  then  being  re- 
quired in  one  day's  time,  the  day  of  June  1st,  1911,  to 
secure  the  total  number  of  20,000  subscribers. 

THE  GREAT  SIGNIFICANCE  ATTACHED  TO  THE  WORD  "ALSO." 

Another  suggestion  earnestly  advanced  by  counsel 
is  that  the  word  "also"  contained  in  the  forfeiture 
clause  is  of  very  great  significance.  It  is  urged  that  be- 
cause under  the  ordinance  as  it  now  stands  it  is  pro- 
vided "that  in  each  such  case  (that  is,  in  case  of  a  vio- 
lation of  either  clause  (a)  or  clause  (b)  already  referred 
to)  said  Company,  its  successors  and  assigns  shall  also 
forfeit  to  the  city  *  *  all  rights  acquired  under  said 
ordinance  of  February  20,  1899,  together  with  its  plant 
and  equipment  for  telephone  purposes,"  and  it 
is  urged  that  this  word  "also"  must  be  con- 
strued as  meaning  that  such  a  forfeiture  of  the 
telephone  rights  could  take  place  only  on  condition 
that  a  forfeiture  of  the  transportation  rights  of  the 
Tunnel  Company  had  previously  or  at  least  contem- 
poraneously taken  place.  This  contention  is  based  on 
the  fact  that  just  previous  to  the  clauses  authorizing  the 


21 

forfeiture  of  the  telephone  rights  the  ordinance  pro- 
vided for  the  forfeiture  of  the  rights  acquired  under 
the  ordinance  of  1903  for  the  construction  of  a  transpor- 
tation system  together  with  the  plant  and  equipment  for 
transportation  purposes.  On  examination  it  appears 
that  this  clause  allowing  this  forfeiture  of  the  transpor- 
tation rights  contains  in  like  manner  the  word  "also" 
so  that  if  the  construction  contended  for  by  counsel  is 
correct  the  city  could  not  proceed  under  this  clause  for 
the  forfeiture  of  the  transportation  rights  and  franchise 
unless  it  had  first  or  did  contemporaneously  therewith 
provide  for  a  forfeiture  of  the  transportation  rights 
under  the  terms  of  the  ordinance  set  out  in  the  para- 
graph prior  to  the  one  just  referred  to  and  so  quite  re- 
moved from  the  clauses  (a)  and  (b)  above  quoted  for 
the  forfeiture  of  the  telephone  rights.  Referring  back 
to  this  earlier  clause  we  find  that  it  provides  first  for  a 
forfeiture  to  the  city  of  the  sum  of  $200,000  to  be  paid 
within  sixty  (60)  days  after  the  expiration  of  the  period 
provided  for  the  construction  of  the  transportation  sys- 
tem and  only  in  case  of  the  failure  of  the  company  to 
pay  the  cash  penalty  was  the  company  to  forfeit  the 
rights  acquired  under  the  1903  franchise  to  operate  a 
transportation  system. 

With  all  due  deference  to  counsel  it  seems  to  me  that 
such  a  construction  so  vitally  and  fundamentally 
changing  the  entire  meaning  of  all  of  these  for- 
feiture clauses  cannot  be  based  upon  the  word 
"also,"  a  word,  which,  according  to  the  admis- 
sions of  counsel,  can  be  used  in  a  great  variety  of  mean- 
ings. One  of  the  well  recognized  meanings  of  the  word 
"also"  is  "likewise"  or  "in  like  manner"  or  "further," 
and  these  meanings  of  the  word  would  simply 
indicate  that  in  this  clause  the  City  Council  was  provid- 
ing other  and  additional  remedies  by  way  of  forfei- 


22 

ture  and  not  that  the  remedy  here  provided  was  one 
which  could  be  availed  of  only  upon  the  condition 
precedent  that  all  of  the  earlier  forfeitures  had  already 
been  exercised.10 

That  the  interpretation  of  the  ordinance  contended  for 
by  counsel  is  not  the  correct  one  is,  to  my  mind,  shown 
conclusively  by  the  fact  that  it  is  provided  in  the  ordi- 
nance, that,  if  the  city  forfeits  the  telephone  rights  and 
property  under  either  of  the  forfeiture  clauses  (a)  or 
(b)  already  referred  to,  the  company  " shall  be  under  ob- 
ligations to  furnish  the  city  without  charge  all 
space  in  any  or  all  of  its  tunnels  and  conduits  necessary 
for  the  carrying  on  of  said  telephone  business ;  such  space 
at  no  time  to  be  less  than  that  required  to  reasonably 
accommodate  equipment  for  the  service  of  20,000  tele- 
phone subscribers."  The  ordinance  clearly  contemplated 
that  the  telephone  rights  and  property  might  be  for- 
feited by  the  city  in  spite  of  the  fact  that  the  company 
continued  to  own  and  operate  the  tunnels  for  transpor- 
tation purposes  and  that  in  that  event  the  company 
must  give  the  city  space  in  its  tunnels  for  the  telephone 
equipment  which  had  already  been  forfeited  to  the  city. 


10In  the  opinion  of  Schuyler,  Ettelson  &  Weinfeld  the  following  cases 
are  cited  as  supporting  the  construction  placed  upon  the  word  "also"  as 
used  in  the  clause  relating  to  the  conditions  of  the  forfeiture  of  the 
telephone  system: 

Panton  \.  Tefft,  22  111.,  367,  376. 

Morrison  \.  Schoor,  197  111.,  554,  566. 

Loring  v.  Hayes,  86  Me.,  351,  355,  357. 

Kinkle  v.  Wilson,  29  N.  Y.  Supp.,  27,  31. 

Stockton  v.  Haddock,  10  Fed.,  132,  134. 

Rowlings  v.  Hunt,  90  N.  C.,  270,  276. 

Van  Dusen  v.  Fridley,  43  N.  W.  Rep.,  703,  5. 

Mace  v.  Mace,  85  Me.,  283,  286. 

The  above  cases  give  to  the  word  "also"  various  definitions  of  "in 
ddilition  to,"  "in  like  manner,"  "likewise,"  "besides,"  and  "too."  None  of 
these  cases  goes  so  far  as  to  indicate  that  the  pro\rision  of  the  first  of 
two  clauses  connected  by  the  word  "also"  must  be  fulfilled  before  the  pro- 
visions of  the  second  clause  can  apply.  None  of  the  cases  indicate  that 
the  first  clause  is  a  condition  precedent  to  the  second  clause.  While  the 
cases  indicate  that  the  word  "also"  signifies  conjunction  or  cumulation, 
Ilicii  ilo  not  support  tlte  c.rtrcnic  proposition  wade  in  the  opinion  referred 
to  Unit  flic  ironl  iinlicatcs  the  m-ccxsity  of  the  happening  of  the  first 
condition  before  the  second  condition  can  have  any  validity  whatever. 


23 

This  shows  that  it  was  not  necessary,  as  con- 
tended by  counsel,  that  the  city  should  first  forfeit  the 
tunnels  and  the  transportation  equipment  before  taking 
any  action  for  the  forfeiture  of  the  telephone  rights  and 
equipment,  and  that  as  a  matter  of  fact  the  opposite  pro- 
cedure was  authorized  by  the  ordinances. 
Referring  to  this  contention  counsel  says : 

"The  argument  of  this  criticism  is  a  logical  one, 
but  subsequent  study  has  convinced  us  that  the 
premise  upon  which  it  is  based  is  not  valid,  and  that, 
consequently,  the  argument  itself,  depending  for  its 
conclusion  upon  the  validity  of  that  premise,  falls 
when  the  falsity  of  the  premise  appears." 

I  will  not  attempt  in  this  opinion  to  review  in  detail 
counsel's  argument  in  this  connection.  I  have  given 
it  consideration  and  it  does  not  seem  to  me  to  justify 
the  conclusion  arrived  at.  Counsel  relies  in  part  upon 
Section  4  of  'the  ordinance  of  1903  providing  that  the 
company  "may  lease  but  not  beyond  the  term  of  this 
grant  space  in  its  said  tunnels  *  only 

to  such  persons  or  corporations  as  may  hereafter  be  au- 
thorized by  the  city  to  conduct  or  carry  on  business  in 
or  through  conduits  or  tunnels  authorized  and 

a  certified  copy  of  such  lease  shall  be  filed  with  the  City 
Comptroller."  It  is  urged  that  under  the  terms  of  this 
Section  4  it  would  have  been  competent  for  the  company 
to  make  leases  co-extensive  in  time  with  the  franchises 
of  the  company  and  that  the  city  could  not,  by  any  for- 
feiture that  it  attempted,  affect  the  leases  thus  made 
and  unexpired.  I  cannot  take  the  same  view  of  this 
matter  that  counsel  does. 

The  ordinances  are  matters  of  public  record  and  anyone 
dealing  with  the  tunnel  company  or  taking  a  lease  there- 
from would  certainly  be  chargeable  with  full  notice  of 
all  the  provisions  of  the  ordinances  and  any  rights  that 
such  licensee  might  acquire  would  bo  subject  to  the  terms 


24 

of  the  ordinances  permitting  forfeiture  by  the  city  of 
the  telephone  rights  and  property  on  certain  conditions 
and  of  the  transportation  rights  and  property  on  certain 
other  conditions.  Counsel  in  this  same  connection  says : 

"A  re-examination  of  the  ordinances  since  writ- 
ing this  opinion,  has  convinced  us  that  the  draftsman 
of  the  ordinances  intended  to  divide  the  tunnel  prop- 
erties in  the  streets  into  three  parts,  instead  of  two, 
namely : 

1.  The  tunnels  themselves. 

2.  The  transportation  system  (including  the  right 
of  way  in  the  tunnels  and  the  tracks,  etc.). 

3.  The  telephone  plant  and  equipment. 

I  have  not  been  able  to  agree  with  counsel  in  this  re- 
gard, but  my  views  in  this  connection  are  stated  below  in 
my  discussion  of  the  second  of  the  two  questions  pro- 
pounded by  your  Committee. 

ALLEGED  INABILITY  OF  COMPANY  TO  PERFORM  CONDITIONS 
OF  ORDINANCE. 

Another  contention  made  by  counsel  in  support  of  the 
construction  of  these  forfeiture  clauses  for  which  counsel 
stand  is  that  if  it  be  held  that  the  company  was  required 
at  its  peril  to  secure  20,000  bona  fide  subscribers  to  the 
telephone  system,  such  requirement  would  be  void  because 
it  is  something  beyond  the  control  of  the  company  and 
is  impossible  of  performance.  That  is  to  say,  it  is  con- 
tended that  inasmuch  as  the  company  has  no  power  to 
compel  the  people  of  Chicago  to  become  subscribers 
to  its  automatic  telephone  system  the  company  cannot  be 
forced  by  the  city  to  live  up  to  the  provisions  of  the  ordi- 
nance requiring  the  securing  of  such  number  of  bona  fide 
subscribers. 

It  can  be  said  in  reply  to  this  suggestion  that  the 
company  sought  and  secured  from  the  City  of  Chicago  a 
franchise  containing  this  provision.  The  company  vol- 
untarily entered  into  a  contract  with  the  city  containing 


25 

this  as  one  of  its  provisions.  The  company  then  knew 
as  well  as  it  does  at  present  that  it  could  not  compel  the 
people  of  Chicago  to  take  the  automatic  telephone  sys- 
tem. I  do  not  mean  by  this  that  they  knew  that  the  peo- 
ple of  Chicago  would  not  voluntarily  become  subscribers 
to  that  system,  but  they  knew  that  the  company  possessed 
no  means  of  compelling  the  making  of  subscription  con- 
tracts. In  spite  of  this  the  company  by  its  sol- 
emn act  in  seeking  and  accepting  this  ordinance 
assumed  the  burden  of  performing  this  condition 
and  cannot  now  be  heard  to  complain  of  the 
difficulty  or  even  impossibility  of  its  performance. 
Many  a  contract  is  enforced  against  the  parties  thereto 
involving  situations  not  unlike  that  here  presented.  Sup- 
pose a  sales  agent  of  a  great  manufacturing  or  mercan- 
tile concern  guaranties  absolutely  as  a  condition  of  se- 
curing, say  an  exclusive  agency,  that  be  will  sell  in  each 
of  several  years  a  minimum  of  a  named  amount  of  goods. 
He  has  no  power  to  force  the  public  within  the  territory 
given  to  him  exclusively  to  buy  the  goods  which  he  sells. 
Still  if  he  fails  to  perform  this  condition  of  his  employ- 
ment I  take  it  there  can  be  no  doubt  that  he  would  have 
to  surrender  his  exclusive  agency  and  admit  that  his 
employer  could  deprive  him  of  the  privileges  which  had 
been  secured  to  him  under  his  contract  for  a  long  pe- 
riod of  years  on  condition  that  he  should  in  each  arid 
every  year  sell  the  amount  of  goods  therein  named.11 


"The  case  of  Coicasjee  Nanabhoi/  v.  Lallbhoy  Vullubhoi/,  Law  Reports, 
Indian  Appeals,  1875-76,  was  cited  by  counsel  for  the  bondholders  as 
an  authority  to  the  effect  that  where  the  defendant  had  hired  plaintiff 
for  the  term  of  plaintiff's  life  and  agreed  to  give  the  plaintiff  a  com- 
mission on  all  the  business  of  the  defendant,  there  would  be  an  implied 
condition  that  if  the  defendant  found  itself  in  financial  difficulties  and 
was  wound  up,  the  plaintiff  could  not  recover  for  commissions  not 
then  earned.  This  case  seems  to  me  distinguishable  from  the  facts 
stated  above.  In  this  case  from  the  Indian  Appeals  there  was  no  express 
stipulation  and  the  court  implied  this  condition  in  the  absence  of  an 
express  stipulation.  If  there  had  been  an  express  stipulation  that  the 
commissions  should  continue  without  regard  to  the  defendant's  financial 
condition  or  situation,  the  decision  would,  I  take  it,  have  been  different ; 
and  in  the  ordinances  now  under  discussion  we  have  an  express  under- 
taking as  I  view  it  on  the  part  of  the  company  to  have  at  all  times 
20,000  bona  fide  subscribers. 


26 

In  the  same  way  here,  this  company  chose  to  accept  a  li- 
cense from  the  city  which,  under  the  authorities,  consti- 
tuted a  contract  between  the  company  and  the  city  and 
the  mere  fact  that  such  contract  contained  provisions 
onerous  or  difficult  of  performance  cannot  excuse  the 
company  if  it  seeks  to  continue  to  exercise  the  rights  and 
privileges  which  were  granted  to  it  on  these  express  con- 
ditions with  which  the  company  has  failed  to  comply. 

EFFECT  OF  CHICAGO  TELEPHONE  COMPANY  ORDINANCE  OF 

1907. 

Another  similar  consideration  is  suggested  to  the  effect 
that  the  city  has  prevented  the  company  from  perform- 
ing this  condition  by  reason  of  certain  ordinances  which 
the  city  granted  to  the  Chicago  Telephone  Company  in 
1907,  regulating  the  rates  of  said  company  and  that  by 
so  doing  the  city  made  that  company  a  still  more  suc- 
cessful competitor  of  the  automatic  telephone  system  and 
thus,  as  it  is  contended,  prevented  the  automatic  com- 
pany from  securing  the  minimum  number  of  bona  fide 
telephone  subscribers  required;  or,  if  they  did  not  pre- 
vent their  securing  such  number,  at  least  prevented  their 
retaining  such  number. 

The  contention  as  it  seems  to  me  amounts  to  this,  that 
the  City  of  Chicago  having  granted  certain  rights  to  the 
Automatic  Company  deprived  itself  of  all  ability  to  pass 
a  subsequent  ordinance  granting  other  rights  or  mak- 
ing other  regulations  for  the  other  public  utility  engaged 
in  the  same  line  of  business,  the  Chicago  Telephone 
Company.  Certainly  this  contention  cannot  "oe  sustained. 
There  is  no  need  of  the  citation  of  authorities  to  the  ef- 
fect that  a  city  council  does  not  in  this  way  deprive  it- 
self of  its  powers  or  relieve  itself  from  the  duty  to  regu- 
late other  public  utilities  operating  within  the  municipal- 
ity by  the  passage  of  ordinances  of  later  date. 


27 


THE  CONTENTION  THAT  THE  CLAUSES  AMOUNT  TO  A  ' '  BET.  ' ' 

Another  suggestion  is  made  that  the  forfeiture  clauses 
in  the  ordinances  now  under  consideration  if  given  the 
construction  for  which  I  contend,  will  make  these  clauses 
in  effect  a  bet  and  so  obnoxious  to  the  general  policy  of 
the  law  condemning  transactions  involving  chance  or 
gambling.  I  fail  to  find  in  the  ordinance  any  justifica- 
tion for  this  contention.  The  clauses  of  forfeiture  there- 
in contained  are,  as  has  been  repeatedly  stated  by  coun- 
sel for  the  company  and  the  bondholders,  conditions  sub- 
sequent, similar  to  conditions  often  inserted  in  ordinances 
in  favor  of  public  utility  corporations  and  in  some  sense 
similar  to  conditions  subsequent  in  private  deeds  and  con- 
tracts, although  as  above  stated,  in  some  particulars  the 
rules  of  law  as  applied  to  such  private  contracts  differ 
from  those  applicable  to  the  construction  of  these  public 
contracts.  But  that  such  a  condition  subsequent  consti- 
tutes a  bet  merely  because  there  was  always  the  possi- 
bility, which  it  would  seem  that  all  parties  must  have 
recognized,  that  the  company  would  never  be  able  to 
secure  20,000  bona  fide  subscribers,  does  not  in  any  way 
justify  to  my  mind  the  conclusion  that  it  was  a  betting 
transaction.  Undoubtedly  both  parties  to  this  contract, 
the  company  and  the  city,  had  confidence  that  t\ie  com- 
pany would  be  able  to  make  good  and  secure  the  neces- 
sary 20,000  bona  fide  subscribers.  The  City  of  Chicago 
would  never  have  granted  the  franchise,  would  never  have 
permitted  its  streets  to  be  torn  up  and  the  public  to  be 
inconvenienced  in  that  and  other  ways  if  it  had  not  been 
confidently  expected  that  the  company  would  be  success- 
ful in  securing  the  necessary  number  of  bona  fide  tele- 
phone subscribers  and  would  continue  to  be  an  active  com- 
petitor of  the  Chicago  Telephone  Company,  it  being  be- 


28 

lieved  at  that  time  that  competition  between  telephone 
companies  was  desirable  from  the  public  standpoint. 

I  have  now  discussed  most  of  the  principal 
contentions  made  by  counsel  for  the  company  and  the 
bondholders  in  support  of  the  views  which  they  advance 
in  connection  with  the  first  of  the  two  questions  sub- 
mitted to  me  by  your  Committee.  I  now  pass  to  a  con- 
sideration of  the  second  question  propounded,  which  was 
No.  3  among  the  questions  propounded  by  his  Honor, 
the  Mayor,  to  Mr.  Fisher. 

THIRD  QUESTION. 

In  reply  to  this  question,  which  is : 

WHAT  PROPERTY  THE  CITY  WILL,  GET  IN  THE  EVENT  OF 
A  FORFEITURE! 

I  reply  that : 

THE  CITY  WILL  GET  THE  PLANT  AND  EQUIPMENT  OF 
THE  COMPANY  FOR  TELEPHONE  PURPOSES. 

Just  exactly  what  physical  property  will  be  covered 
by  the  forfeiture  it  is  impossible  for  me  at  this  time  to 
determine.  In  fact  there  may  be  many  difficult  questions 
arising  as  to  just  what  is  telephone  equipment  or  prop- 
erty as  distinguished  from  just  what  is  transportation 
equipment  or  property  of  the  Tunnel  Company.  The 
ordinances  recognize  that  there  may  be  such  difficulty 
in  determining  the  distinction  between  the  two  and  in 
Section  6  of  the  1903  ordinance  providing  for  the  ap- 
praisal of  the  transportation- property  which  the  city  was 
authorized  to  take  over  at  the  end  of  20  years,  it  is  pro- 
vided : 

"The  appraisers  shall  determine  what  tangible 
property,  real  and  personal  in  addition  to  the  said 
tunnels  owned  by  the  company  and  then  used  for 
purposes  of  this  grant  is  reasonably  required  for  its 
continued  operation." 


29 

I  have  not  as  yet  even  had  time  to  consider  with  care 
just  what  general  classes  of  property  would  pass  to  the 
city  under  a  forfeiture.  That  is  a  question  upon  which 
I  desire  more  time  for  consideration.12.  But  that  there 
can  be  in  a  general  way  a  distinction  made  between  the 
transportation  property  and  the  telephone  property 
seems  to  be  contended  by  the  Tunnel  Company  it- 
self, for  in  the  ordinance  introduced  on  its  behalf  and 
for  the  purpose  of  authorizing  the  sale  to  the  Chicago 
Telephone  Company  of  the  telephone  property  and  equip- 
ment it  is  stated : 

"That  permission  and  authority  are  hereby 
granted  to  the  Chicago  Tunnel  Company  to  sell  its 
telephone  plant,  system  and  equipment,  including  all 
the  property  of  the  Chicago  Tunnel  Company  nec- 
essary and  suitable  to  and  used  by  it  for  carrying 
on  the  telephone  business  in  the  City  of  Chicago, 


"It  has  been  informally  suggested  that  there  would  perhaps  l;e  a  dif- 
ferent construction  of  the  ordinance  so  far  as  it  affects  the  forfeiture 
of  the  property  from  the  construction  as  to  its  effect  upon  the  forfeiture 
of  the  franchise  or  license  to  use  the  city  streets. 

In  City  of  Tower  v.  Tower  &  Soudan  Street  Railway  Company,  68 
Minn.,  500,  an  ordinance  granted  the  use  of  the  streets  for  a  street  rail- 
way. The  grant  was  upon  a  condition  that  the  railway  be  constructed 
within  a  certain  time  and  be  operated  continuously.  In  default  thereof 
the  railway  company  was  to  forfeit  its  rights  to  use  of  the  streets  and  was 
to  forfeit  its  "road"  to  the  city.  Upon  the  failure  of  the  railway  com- 
pany to  operate  for  a  considerable  period  the  city  declared  a  forfeiture 
of  the  franchise  and  of  the  road  and  the  forfeiture  was  upheld.  In  up- 
holding the  action  of  the  city  in  forfeiting  the  franchise  and  the  property 
the  court  held  that  the  rule  that  forfeitures  are  not  favored  in  the  law 
could  not  apply  to  a  case  involving  the  public  interest.  The  same  rule 
II-IIK  applied  to  the  forfeiture  of  the  property  as  applied  to  the  forfeiture 
of  the  franchise.  Furthermore  the  court  gave  a  broad  and  liberal  inter- 
pretation to  the  word  "road"  as  used  in  the  forfeiture  provision  of  the 
ordinance.  It  was  contended  by  the  railway  company  that  the  word 
"road"  included  only  the  roadbed  and  that  the  railway  company  was. 
therefore,  entitled  to  the  steel  rails.  The  court  said,  however,  "the  word 
'road'  as  used  in  Section  12  includes  the  roadbed  with  the  tics,  rails  and 
nil  lhat  constitutes  a  complete  superstructure  on  which  cars  transport  pas- 
xaii/crs  or  property  or  both."  p.  504. 

The  case  of  Farnsworth  v.  Minnesota  tC-  I'aciflc  /?.  R.  Co.,  02  U.  S..  40, 
likewise  involved  the  forfeiture  of  property  in  addition  to  the  franchise 
of  a  railroad  company.  The  court  made  no  distinction  bctii'cc'n  the  prop- 
erty and  the  franchise  in  applying  tbe  rule  that  public  i>olic.v  and  the 
public  interest  forbade  the  application  of  the  doctrine  that  forfeitures 
are  not  favored  and  that  equity  abhors  a  forfeiture. 

In  the  case  of  Whitinfl  v.  Village  of  New  Baltimore,  127  Mich.,  66,  the 
city  granted  to  a  railway  company  a  license  to  lay  its  tracks  on  certain 
streets  and  required  that  a  sum  of  $2,000  be  deposited  with  the  city, 


30 

erected,  operated  and  maintained  under  the  provi- 
sions of  an  ordinance  adopted  by  the  City  Council  of 
the  City  of  Chicago  on  the  20th  day  of  February, 
1899,  and  accepted  by  the    Illinois    Telephone  and 
Telegraph  Company,  a  predecessor  of  the  Chicago 
Tunnel  Company,  on  the  3rd  day  of  April,  1899,  and 
under  the    provisions    of    ordinances    amendatory 
thereof,  separate  and  apart,  however,  from  its  tun- 
nels and  tunnel  systems  and  its  plant  and  equipment 
for  transportation  and  other  purposes." 
Running  throughout  the  ordinances  there  seems  to  be 
a  distinction  between  the  telephone  system  on  the  one 
hand  and  the  transportation  system  on  the  other.     The 
first  ordinance  of  1899,  of  course,  referred  exclusively 
to  the  telephone  system.     The  amendatory  ordinance  of 
1903  granted  the  right  to  conduct  a  transportation  sys- 
tem and  the  two  were  expressly  separated  by  clause  6 
by  which  it  was  provided  that 

"The  City  Council  shall  have  the  right,  at  the  ex- 
piration of  twenty  (20)  years  from  the  passage  of 

which  sum  was  to  be  forfeited  in  the  event  of  the  failure  of  the  railway 
company  to  construct  its  road  within  a  certain  period.  Upon  failure  of 
the  railway  company  to  so  construct  its  road  as  provided  by  the  ordi- 
nance the  city  took  possession  of  the  sum  of  $2,000  and  the  rights  of  the 
city  to  forfeit  this  sum  was  upheld  by  the  court. 

City  of  Detroit  v.  People's  Telephone  Company,  135  Mich.,  696,  is  a  sim- 
ilar case  where  the  forfeiture  of  $5,000  to  the  city  was  upheld.  The  tele- 
phone company  had  failed  to  commence  operation  within  the  time  required 
by  the  ordinance.  In  upholding  the  right  of  the  city  to  forfeit  this  sum 
in  accordance  with  the  terms  of  the  ordinance  the  court  said : 

"It  is  true  that  the  law  abhors  forfeiture  but  there  can  'be  no  other 
construction  of  this  charter  than  that  the  defendant  was  to  forfeit 
the  sum  as  liquidated  damages  for  the  failure  to  fulfill  the  agree- 
ment to  construct  the  plant  and  operate  it  as  provided  in  Section  5." 
p.  699. 

The  foregoing  cases  distinctly  uphold  the  right  to  declare  a  forfeiture 
of  property  when  the  provisions  of  an  ordinance  have  been  violated. 

See  also  City  of  Belleville  v.  Citizens'  Horse  Railway  Co.,  152  111.,  171, 
cited  in  Note  12. 

Forfeitures  of  public  land  grants  have  been  upheld  by  the  Supreme 
Court  of  the  United  States  in  numerous  cases.  In  many  such  cases  the 
court  applies  to  the  construction  of  the  acts  granting  to  private  indi- 
viduals parts  of  the  public  domain  the  rule  of  strict  construction  against 
the  grantee  and  in  favor  of  the  public.  In  these  cases  there  is  an 
application  of  the  rule  for  which  we  contend  to  forfeitures  of  property 
as  distinct  from  forfeitures  of  franchise  or  license  privileges. 
In  this  connection  see : 

A  tlantic  and  Pacific  Railroad  Company  v.  Hingus,  165  U.  S.,  413. 
U.  S.  v.  Oregon  &  California  Railroad  Company,  164  U.  S.,  526, 
41   L.  Ed.,  541. 


31 

this  ordinance,  to  terminate  the  grant  of  privileges 
to  said  company,  provided  twelve  (12)  months'  pre- 
vious notice  in  writing  shall  have  been  given  of  the 
intention  of  the  city  to  take  over  the  property  of  the 
grantee,  suitable  to  and  used  by  it  for  all  the  pur- 
poses of  this  grant,  including  the  tunnels  themselves, 
and  all  appurtenances,  equipment  and  fixtures  ex- 
cept the  wires,  equipment  and  fixtures  necessary  to 
the  carrying   on  of  the   telephone   business,  which 
wires,  equipment  and  fixtures  shall  not  be  subject 
to  city  purchase  until  the  expiration  of  the  period 
named  in  said  ordinance  of  February  20,  1899,  it 
being  the  intent  and  purpose  of  the  City  Council  that 
the  grant  by  said  ordinance  of  February  20,  1899, 
to  carry  on  a  telephone  business  shall  continue  un- 
abridged for  the  full  term  of  said  grant,  but  that 
the  grant,  except  as  hereinabove  provided,  of  new 
privileges  by  this  ordinance  conferred,  including  the 
right  to  construct  tunnels,  shall  be  subject  to  ter- 
mination and  city  purchase  as  above  provided.    And 
in  the  event  that  the  City  Council  shall  so  terminate 
the  grant  and  take  over  the  tunnels  and  fixtures  as 
above  provided,  except  such  as  may  be  necessary  to 
the  carrying  on  of  the  telephone  business,  then  such 
company  shall  be  permitted  for  the  full  term  of  said 
ordinance  of  February  20,  1899,  to  utilize  said  tun- 
nels to  such  extent  as  may  be  necessary  to  the  carry- 
ing on  of  the  telephone  business  and  shall  pay  for 
the  use  of  such  tunnels  a  reasonable  rental." 
By  this  clause,  therefore,  it  is  expressly  provided  that 
the  City  Council  might  at  the  end  of  twenty  (20)  years, 
that  is,  in  1923,  buy  the  tunnel  property  used  for  trans- 
portation purposes  and  that  in  spite  of   such   purchase 
the  rights  of  the  company  to  conduct  a  telephone  busi- 
ness should  continue  for  the  full  grant  of  the  original 
license  or  until  1929,  a  period  of  some  six  years  after 
the  authorized  purchase  of  the  transportation  property. 
The   same   distinction   between   transportation   rights 
and  property  on  the  one  hand  and  telephone  rights  and 
property  on  the  other  hand  is  recognized  in  Section  li- 
the forfeiture  section  of  this  amendatory  ordinance  of 


32 

1903.  As  already  noted  this  section  includes  separate 
provisions  for  the  forfeiture  of  the  transportation  prop- 
erty on  certain  conditions  and  the  forfeiture  of  the  tele- 
phone property  on  certain  other  conditions  and  this  same 
distinction  is  carried  through  the  subsequent  amendatory 
ordinances  of  February  1st,  1909,  and  June  28th,  1909, 
which  re-enact  Section  11  of  the  amendatory  ordinance 
of  1903  with  only  slight,  and  for  this  purpose  inconse- 
quential changes. 

The  distinction  between  the  two  systems  is  further  em- 
phasized by  the  fact  that  these  ordinances  require  the 
payment  of  separate  and  different  compensation  from 
each,  the  transportation  system  being  required  to  pay 
one  scale  of  percentages  on  its  gross  receipts  while  the 
telephone  system  is  required  to  pay  an  entirely  different 
scale  of  percentages  on  its  gross  receipts,  thus  necessi- 
tating the  keeping  of  the  business  of  the  two  systems 
distinct. 

CONCLUSION. 

In  conclusion,  therefore,  I  would  state  that  in  my  opin- 
ion the  City  of  Chicago  has  the  right  under  the  ordinances 
granted  to  the  Illinois  Telephone  and  Telegraph  Com- 
pany to  pass  an  ordinance  declaring  a  forfeiture  of  the 
rights  of  that  company  granted  under  the  ordinance  of 
February  20,  1899,  and  of  the  plant  and  equipment  for 
telephone  purposes  constructed  by  said  company  or  its 
successors  and  assigns  under  said  ordinance  or  any  of 
the  later  ordinances  amendatory  thereof.  Such  ordi- 
nance would  at  least  amount  to  a  declaration  of  the  pur- 
pose of  the  city  to  declare  a  forfeiture.  Whether  or 
not  subsequent  court  action  would  be  necessary  on  the 
part  of  the  city  in  order  to  secure  possession  of  the 
physical  property  so  declared  forfeited  to  the  city  is  a 


33 

question  upon  which  I  am  not  at  present  called  upon  to 
pass  and  which  will  require  further  consideration.13.  In 
any  event,  the  first  step  in  the  proceeding,  if  this  Com- 
mittee and  the  Council  see  fit  to  enforce  the  rights  of  the 
city  in  this  regard,  is  to  pass  such  ordinance  and  then  to 
follow  the  same  up,  if  need  be,  by  court  proceedings. 

I  have  prepared  a  draft  of  an  ordinance  for  the  pur- 
pose of  declaring  such  forfeitures.  In  the  first  in- 
stance I  prepared  drafts  of  two  separate  ordinances,  the 
one  forfeiting  the  rights  of  the  company  to  do  a  tele- 
phone business  and  the  second  forfeiting  its  plant  and 
equipment  for  telephone  purposes,  but  while  it  is  quite 
possible  that  such  procedure  would  accomplish  the  pur- 
pose for  which  it  was  intended,  it  has  seemed  to  me  on 


"In  this  connection  it  may  be  well  to  call  attention  to  a  few  cases  in- 
dicating the  method  of  procedure  to  procure  possession  of  the  property 
which  may  be  forfeited. 

In  The  City  of  Belleville  v.  Citizens'  Horse  Railway  Company,  152  111., 
171,  upon  the  failure  of  the  defendant  to  fulfill  the  conditions  of  the 
ordinance,  the  city  passed  an  ordinance  repealing  and  revoking  the  rights 
and  privileges  of  the  railway  company.  The  right  of  the  city  to  ter- 
minate the  license  to  the  railway  company  was  upheld  but  with  refer- 
ence to  the  right  of  the  city  to  secure  possession  of  the  property  of  the 
railway  company  the  court  said  : 

"The  city  had  no  authority  without  the  judgment  of  a  court  to 
forfeit  to  its  own  use  the  tracks,  switches  and  turnouts  of  the  rail- 
way company.  But  there  u'as  no  attempt  to  enforce  it.  The  remain- 
ing sections  are  complete  in  themselves  and  so  distinct  and  separately 
enforcible  that  they  may  be  enforced  without  regard  to  Section  3. 
They  therefore  are  not  invalid."  p.  188. 

This  language  implies  that  the  city  had  the  power  to  enforce  a  for- 
feiture by  appropriate  legal  proceedings. 

In  People  v.  Central  Union  Telephone  Company,  232  111.,  260,  the  court 
upheld  the  rights  of  the  city  to  terminate  the  license  granted  to  the 
defendant  to  use  the  streets  of  the  City  of  Moline  for  telephone  wires. 
The  defendant  insisted  upon  continuing  to  use  the  city  streets  and 
thereupon  quo  icarranto  proceedings  were  brought  to  oust  the  telephone 
company  from  the  use  of  the  streets.  It  was  held  that  this  was  a  proper 
form  of  action  to  determine  the  right  of  the  city  to  declare  the  for- 
feiture of  the  franchise  or  license  and  to  determine  the  rights  of  the 
defendant  to  the  use  of  the  streets.  • 

The  above  cases  upheld  the  validity  of  ordinances  passed  by  the  city 
declaring  the  termination  of  the  rights  and  privileges  granted  to  pri- 
vate corporations.  They  would  also  indicate  that  such  an  ordinance 
is  necessary.  That  it  is  necessary  to  pass  an  ordinance  declaring  the 
election  of  the  city  to  forfeit  the  franchise  or  license  and  property  as 
provided  Ity  the  grant  in  lield  l>il  the  following  two  cases: 

City  of  Toledo  \.  Toledo  Rail ir ay  and  Liffht  Co.,  2;">  Oh.  Cir.,  441. 
V.  8.  v.  Wanhinf/ton  Improvement  Co.,  180  Fed.,  074. 
In  the  tico  case*  just  cited  it  trait  held  that  the  failure  to  pass  such, 


34 

further  consideration  that  it  would  be  wiser  to  join  in  one 
ordinance  the  appropriate  sections  for  the  forfeiture  of 
the  right  to  do  business  and  for  the  forfeiture  of  the 
plant  and  equipment  for  telephone  purposes.  I  do  this 
because  the  forfeiture  clause,  Section  11  of  the  ordi- 
nances, provides  for  the  forfeiture  to  the  city  of 

"all  rights  acquired  under  said  ordinance  of  Febru- 
ary 20,  1899,  together  ivith  its  plant  and  equipment 
for  telephone  purposes" 

In  view  of  the  words  here  used  it  might  be  contended 
that  the  two  forfeitures  could  not  be  separated  and  that 
a  forfeiture  of  the  telephone  rights  would  not  be  valid 
without  a  forfeiture  of  the  plant  and  equipment.  It 
would  seem  clear  that  the  plant  and  equipment  could  not 
be  forfeited  without  a  forfeiture  of  the  telephone  rights. 

an  ordinance  barred  any  procedure  in  the  courts  to  oust  the  private  com- 
panies from  the  use  of  the  streets  and  the  possession  of  the  property 
forfeited. 

Tn  Los  Angeles  Railway  Company  v.  City  of  Los  Angeles,  152  Cal., 
242,  92  Pac.  Rep.,  490,  it  was  held  that  the  provision  for  forfeiture  in 
the  franchise  was  self-executing  without  the  judgment  of  the  court. 

In  Netv  Jersey  Street  Railway  Comnany  v.  the  Inhabitants  of  South 
Oranac.  58  X.  J.  Eq.,  S3,  43  Atl.  Rep".,  53,  it  was  held  that  the  ordi- 
nance in  that  case  declaring  a  forfeiture  and  providing  for  the  sale  of 
the  property  of  the  street  railway  company  amounted  to  a  decree  of 
court  and  was  an  attempt  on  the  part  of  the  City  Council  to  exercise 
a  judicial  function  and  therefore  was  void.  The  facts  presented  in  this 
case  were  exceptional  in  the  extent  to  which  the  City  Council  attempted 
to  go  providing  for  a  sale  of  the  property,  etc.,  evidently  with  the  idea 
of  precluding  any  possible  judicial  proceedings.  I  do  not  believe  that 
the  objection  that  the  City  Council  was  attempting  to  exercise  judicial 
functions  would  be  held  to  invalidate  an  ordinance  such  as  it  is  here 
proposed  to  pass  in  the  case  of  the  Automatic  Telephone  Company. 

In  the  case  of  Wheeling  <€  E.  G.  R.  Go.  v.  Triadelphia,  4  L.  R.  A.  (X. 
S.),  321,  it  was  held  that  this  objection  to  the  ordinance  there  under 
discussion  could  not  be  sustained.  The  court  said  at  page  331 : 

"The  Legislature  of  the  State  in  declaring  a  forfeiture  performs 
exactly  the  same  function  that  the  Council  performs  in  this  case. 
It  necessarily  ascertains  the  existence  of  a  cause  of  forfeiture.  An 
individual  in  declaring  the  forfeiture  of  a  contract  right  does  the 
same  thing.  But  no  court  has  ever  regarded  such  declaration  in 
either  case  as  an  adjudication.  Nor  do  they  so  regard  such  declara- 
tions made  by  municipal  councils." 
And  again  at  page  332 : 

"Plainly  this  means  that  the  forfeiture  is  effective  only  in  such 
case  just  as  such  a  declaration  by  an  individual  is  effective  when 
he  has  the  right  to  make  it,  and  therefore  has  none  of  the  efficacy 
of  a  judicial  determination." 
See  also 

Myrifh'  \.  Jirn<rJcti.  33  Minn.,  377. 


35 

Under  these  circumstances  it  has  seemed  to  me 
wiser  to  join  both  forfeitures  in  one  ordinance 
so  as  to  prevent  the  possibility  of  the  City  Council 
passing  one  of  the  two  ordinances  and  failing  to  pass 
the  other,  thus  resulting  in  a  situation  which  might  lead 
to  complications  in  the  courts.  I  have  embodied  in  the 
ordinance  the  familiar  clause  to  the  effect  that  the  in- 
validity of  any  one  section  should  not  affect  the  validity 
of  the  other  sections,  so  that  even  if  it  be  assumed  that 
the  right  of  the  city  to  forfeit  the  plant  and  equipment 
is  not  as  clear  as  its  right  to  forfeit  the  telephone  fran- 
chise and  that  the  section  attempting  to  forfeit  the  prop- 
erty would  not  be  sustained,  such  adverse  decision  of 
the  courts  as  to  this  one  section  would  not,  I  believe,  af- 
fect the  validity  of  the  other  clauses  forfeiting  the  right 
to  do  a  telephone  business.  This  is  the  rule  announced 
by  the  Supreme  Court  of  this  state  in  City  of  Belleville 
v.  Citizens  Co.,  152  111.,  171,  cited  at  length  in  note  13. 
If  this  is  so  there  seems  to  be  no  possible  objection  to 
joining  the  two  forfeitures  in  one  ordinance  and  there 
are  very  evident  advantages  in  so  doing. 

I  submit  in  connection  with  this  opinion  the  draft  of 
such  an  ordinance  as  is  above  referred  to  declaring  the 
forfeiture  of  both  the  right  to  do  business  and  the  plant 
and  equipment  for  telephone  purposes. 
Respectfully  submitted, 

STEPHEN  A.  FOSTER. 


37 
ADDENDUM. 


In  the  above  opinion  I  naturally  attempted  to  deal  par- 
ticularly with  such  considerations  as  had  been  urged  by 
counsel  in  their  objections  to  the  power  of  the  City  to 
forfeit  the  telephone  rights  and  property  of  the  Tunnel 
Company.  After  my  opinion  was  read  to  your  Com- 
mittee it  was  suggested  that  there  might  be  a  distinction 
between  a  case  involving  forfeiture  of  rights  and  prop- 
erty for  failure  on  the  part  of  a  company  to  comply  with 
certain  conditions  as  to  operation  and  a  case  where  the 
company  had  abandoned  all  efforts  to  comply  with  the 
terms  of  its  ordinance.  As  a  matter  of  fact  it  appears 
that  a  number  of  the  cases  cited  deal  with  the  former 
situation  and  sustain  forfeitures  for  a  failure  to  comply 
with  conditions  of  the  ordinance,14  but  in  view  of  the  sng- 


14In  People  \.  Central  Union  Telephone  Co.,  232  111.,  260,  the  for- 
feiture of  the  Telephone  Company's  rights  in  the  streets  of  Moline 
was  based  upon  the  failure  of  the  Company  to  comply  with  the  terms 
of  the  ordinance  as  to  the  manner  of  placing  the  poles  and  hanging 
the  wires.  In  this  case  the  City  brought  quo  icarranto  proceedings 
which  were  held  to  be  proper.  But  the  point  to  which  I  here  call  atten- 
tion is  that  there  was  no  pretense  that  there  had  been  any  general 
abandonment  of  the  Company's  franchise  or  any  suggestion  on  its  part 
that  it  would  cease  to  do  business  in  Moline.  This  case  is  of  particular 
importance  as  recognizing  the  right  of  forfeiture  by  quo  irarranto  pro- 
ceedings even  where  there  is  no  express  reservation  of  the  right  to 
repeal  the  ordinance  or  terminate  the  contract  and  holding  that  where 
there  is  an  express  reservation  forfeiture  can  be  declared  even  tli our/It 
the  unfulfilled  conditions  were  not  of  vital  Importance.  The  court  said 
at  page  277 : 

"When  parties  have  agreed  that  one  of  them  shall  have  an  option 
to  terminate  the  contract  if  certain  of  its  terms  are  not  observed 
the  party  may  exercise  his  option  upon  the  failure  to  comply  with 
any  such  terms  and  if  he  elects  to  treat  the  contract  as  at  an  end 
it  trill  lie  discharged,  irhcther  the  term  is  vital  to  the  contract  or 
not.  but  when  there  is  a  failure  to  comply  with  some  term  of  a 
contract  and  there  is  no  agreement  that  the  breach  of  that  term 
shall  operate  as  a  discharge,  it  5s  always  a  question  for  the  courts 
to  determine  whether  or  not  the  default  is  in  a  matter  which  is 
vital  to  the  contract." 

And  the  court  held  that  the  conditions  as  to  the  manner  of  placing 
the  poles  and  hanging  the  wires  were  "vital  to  the  contract"  and  so 
.Instilled  a  forfeiture  of  the  Company's  rights  even  though  there  was 
no  express  reservation  to  that  effect  in  the  ordinance. 

In  the  case  of  Wheeling  &  E.  O.  R.  v.  Triadelphia,  4  L.  R.  A.  (N.  S.). 


38 

gestion  that  the  Chicago  Tunnel  Company  in  its  tele- 
phone as  well  as  in  its  transportation  system  is  a  going 
concern  and  still  attempting  to  comply  with  all  the  terms 
and  conditions  of  the  ordinances  under  which  it  is  oper- 
ating, it  seems  to  me  wise  to  add  to  my  opinion  some 
brief  considerations  of  the  facts  that  bear  upon  this  situ- 
ation. 

THE  TUNNEL  COMPANY  HAS  IN  EFFECT  ABANDONED  ITS  EF- 
FORT TO  COMPLY  WITH  THE  REQUIREMENTS  OF  ITS  ORDI- 
NANCES. 

It  would  seem  to  me  that  a  fair  consideration  of  the 
facts  will  lead  to  the  conclusion  that  the  Chicago  Tun- 
nel Company  has  in  effect  already  abandoned  all  effort  to 
comply  with  the  terms  of  the  ordinances  and  that  we 

321,  the  court  reached  the  same  conclusion  that  a  failure  to  comply 
with  conditions  of  an  ordinance,  especially  where  those  conditions  are 
expressed  in  the  contract,  would  justify  forfeiture  of  the  company's 
rights  and  the  failure  of  the  Street  Railway  Company  to  lay  planks 
of  prescribed  dimensions  along  the  rails  of  its  track  was  held  to  be  a 
sufficient  ground  for  forfeiting  the  ordinance  in  view  of  the  fact  that 
the  ordinance  contained  an  express  clause  giving  the  right  to  forfeit 
for  such  cause.  The  court  said  at  page  333 : 

"The  authorities  relied  upon  to  sustain  the  position  that'  sub- 
stantial compliance  with  conditions,  the  violation  of  which  is  ex- 
pressly made  ground  of  forfeiture,  do  not  support  that  view.  They 
are  all  cases  in  which  the  ordinances  did  not  say  failure  to  com- 
ply with  certain  specific  conditions,  the  conditions  there  in  ques- 
tion, should  result  in  forfeiture  of  the  privilege  granted.  There 
was  no  such  stipulation  in  the  act  construed  by  the  court  of  appeals 
of  New  York  in  People  v.  Broadway  R.  Co.,  126  N.  Y.,  29,  26  N.  E., 
961.  The  propositions  asserted  in  Booth  on  Street  Kailways,  Sec- 
tion 45,  are  inapplicable  for  the  same  reason.  At  Section  46  of 
the  same  work  it  is  said :  'But  if  the  statute  provides  that  upon 
such  failure  the  franchise  shall  "be  terminated"  or  shall  "cease," 
the  default  will  put  an  end  to  the  franchise  without  judicial  pro- 
ceedings, and  the  legislature  may  confer  the  franchise  upon  any 
other  company  or  person.'  And  this  is  fully  sustained  by  the  fol- 
lowing decisions  cited  in  support  of  it:  Re  Brooklyn,  W.  M.  R. 
Co.,  72  N.  Y.,  245,  75  N.  Y.,  335;  Brooklyn  Steam  Transit  Co.  v. 
Brooklyn,  78  N.  Y.,  524 ;  Oakland  R.  Co.  v.  Oakland,  B.  &  F.  V.  R. 
Co.,  45  CaL,  305,  13  Am.  Rep.,  181." 
And  again  on  page  334 : 

"In  the  absence  of  the  stipulation  for  forfeiture  as  to  the  con- 
ditions not  complied  with  here,  it  could  be  held,  consistently  with 
all  authority,  that  there  has  been  a  substantial  compliance  with 
the  contract  as  a  whole,  and,  therefore,  no  cause  of  forfeiture. 
But  it  is  competent  for  the  parties  to  make  any  condition  a  ma- 
terial and  essential  part  of  the  contract.  As  these  parties  have 


39 

therefore  have  presented  in  this  case  a  situation  where  a 
forfeiture,  if  made,  would  be  of  rights  and  property, 
not  merely  because  of  a  past  failure  to  comply  with  the 
requirements  of  the  ordinances,  but  also  because  of  the 
company's  practical  admission  of  its  inability  to  comply 
with  them  in  the  future.  As  I  read  the  briefs  filed  on 
behalf  of  the  Tunnel  Company,  it  would  seem  to  me  clear 
that  the  company  does  not  contemplate  any  attempt  in 
the  future  to  comply  with  the  terms  of  the  ordinance  re- 
quiring it  to  have  20,000  bona  fide  subscribers.  It  says 

done  so,  how  can.  the  court  deny  to  one  of  them  the  benefit  of 
the  t-ontnict,  or  relieve   the  other  from  its  obligation?     A  distinc- 
tion   between    conditions    precedent    and    conditions    subsequent    is 
made  by  the  courts.    The  condition  in  this  case  belongs  to  the  lat- 
ter   class,    but   the   distinction   does   not   seem    to   relieve   the  com- 
pany.    In  the  former  class,  no  declaration  or  adjudication  of  for- 
feiture  is  necessary,   but  in  the  latter  it  is,   since  non-compliance 
may  be  waived.     Hobelwan  v.  Kansas  City  Horse  R.  Co.,  79  Mo.. 
032;  Chicago  v.  Chicago  &  W.  I.  R.  Co.,  105  111.,  73,  78." 
In  Palestine  Water  &  Poirer  Company  v.  Palestine,  40  L.  R.  A.,  203, 
it  was  held  that  the  fact  that  the  Water  Company  came  forward  after 
the  proceedings  for  forfeiture  were  instituted  and  offered  to  perform 
its  contract  did  not  deprive  the  City  of  the  right  to  insist  upon  a  for- 
feiture.    At  page  208  the  court  said : 

«*     *     *     in   this  case   the   Water  Company   did  not  mend   its 
ways  nor  offer  to  do  so  until  after  the  suit  had  been  brought,  and 
we   think   that,   under   the   circumstances,   the   trial   court   did   not 
abuse  its  discretion,  if,  indeed,  .it  had  any  discretion  in  the  mat- 
tcr,  by  refusing  to  extend  the  time  of  performance." 
The  court  also  used   significant  language  concerning  the  contentions 
made   by   bondholders   of   the   company,    which   language   is   applicable 
to  the  situation  presented  to  this  Committee.     The  court  said  at  page 
208: 

"*     *     *     To   revoke  the  franchise   which   the   Water   Company 
had  so  flagrantly  abused  is  a  harsh  remedy,  and  may  cause  loss 
to  fall  upon  those  who  hold  the  bonds,  but  it  is  the  only  adequate 
means  by  which  a  city  can  surely  protect  itself  against  such  wrongs 
as  were  practiced  in  this  case.     Bondholders  of  such  corporations 
are  entitled  to  protection  to  the  extent  that  the  corporations  per- 
form their  duties  under  the  law,  but  they  take  such  bonds  with  the 
knowledge   that   the   continuance   of   the   charter   rights   and  other 
franchises  granted  to  corporations  depends  upon  their  faithful  per- 
formance of  the  duties  to  the  public  for  which  they  were  created." 
On  the  authority  of  these  and  other  cases  it  seems  to  me  clear  that 
the  power  of  the  City  to  forfeit  the  rights  and  property  of  the  Chicago 
Tunnel   Company  for  a   non-compliance  with   the  express   terms  of  its 
ordinances  would  not  be  denied,  even  if  as  suggested  it  should  appear 
that  the  Chicago  Tunnel  Company  was  trying  in  good  faith  to  comply 
with  all   of  the  requirements,  but  had  been  unable  to  meet  the  strict 
letter  of  these  forfeiture  clauses.     However,  as  stated  in   the  body  of 
this  opinion,   I   do  not  find   that   the   Chicago   Tunnel   Company   is   in 
fact  making  this  attempt.     For  both  of  these  reasons  this  doctrine  of 
"substantial  compliance"  has  in  my  opinion  no  application  to  the  facts 
presented  to  this  Committee. 


40 

frankly  that  it  cannot  compote  with  the  Chicago  Tele- 
phone Company.  At  page  1.4  of  the  statement  filed  by 
its  counsel  on  the  "Consequences  of  a  Declaration  of 
Forfeiture"  it  is  stated  that  the  experiment  of  compet- 
ing with  the  Chicago  Telephone  Company  "has  been 
fried,"  and  at  the  bottom  of  page  16,  it  is  stated  that 
"the  Chicago  Telephone  Company  lias  already 

pushed  the  Automatic  Telephone  Company  to  the  wall." 
And  similar  expressions  are  to  be  found  throughout  the 
briefs  filed  on  behalf  of  the  company  and  its  bondholders. 

THE  CHICAGO  TUNNEL  COMPANY  BY  ITS  AGREEMENT  TO 
SELL  OUT  TO  THE  BELL  INTERESTS  VIOLATED  THE  TERMS 
CF  THE  1899  ORDINANCE  AND  RENDERED  COMPETITION  IN- 
OPERATVIE. 

It  is  to  be  noted  that  the  rights  of  forfeiture  provided 
in  the  final  paragraph  of  Section  2  of  the  original  ordi- 
nance of  February  20,  1899,  have  at  all  times  been  care- 
fully preserved  by  the  subsequent  ordinances.  The  ordi- 
nance of  June  20th,  1903,  which  was  amendatory  to  the 
ordinance  passed  five  days  earlier  on  July  15th,  1903,  con- 
tained this  provision: 

"Provided,  however,  that  nothing  herein  contained 
shall  impair  the  obligation  of  said  company  under 
said  ordinance  of  February  20,  1899,  to  construct 
and  have  in  operation  within  five  (5)  years  from  the 
date  of  said  ordinance  of  February  20,  1899,  a  tele- 
phone exchange  serving  two  thousand  (2,000)  tele- 
phones or  shall  vary  the  provisions  of  forfeiture 
therein  contained." 

The  subsequent  ordinances  of  February  1st,  1909,  and 
June  28,  1909,  contained  substantially  the  same  words 
with  the  additional  clause  "except  as  herein  expressly 
provided"  added  to  the  proviso.  I  do  not  find  anything 
"expressly  provided"  in  either  of  these  later  ordinances 
that  can  be  construed  as  diminishing  the  rights  of  the 


41 

City  to  declare  a  forfeiture  under  the  last  paragraph  of 
Section  2  of  the  original  ordinance  of  February  20,  1899, 
which  reads  as  follows: 

"It  shall  be  expressly  the  condition  of  this  grant 
that  if  the  Illinois  Telephone  and  Telegraph  Com- 
pany or  any  of  its  successors  or  assigns  shall  either 
sell  out  to  or  enter  into  any  agreement  with  any  exist- 
ing telephone  company  or  any  of  its  successors  or  as- 
signs doing  business  in  the  City  of  Chicago,  which 
agreement  would  tend  to  make  competition  inoper- 
ative, this  ordinance  shall  become  null  and  void  and 
the  plant  of  said  company  together  with  the  conduits, 
wires  and  poles  then  in  the  streets  belonging  to  said 
company  shall  be  forfeited  to  the  City." 
As  is  well  known  to  your  Committee,  the  Chicago  Tun- 
nel Company    did    on    the    8th    day    of    July,  1913,  ac- 
cording to  the    papers    submitted,  enter  into  an  agree- 
ment to  sell,  and  the  American  Telephone  and  Telegraph 
Company,  by  said  agreement  agreed  to  purchase,  for  the 
sum  of  $6,300,000  the  telephone  plant,  etc.,  of  the  Chi- 
cago Tunnel    Company.      This    agreement    was    subse- 
quently modified  by  memorandum  agreement  dated  Oc- 
tober   ,  1913,  and  by  letter  of  October  20,  1913,  ad- 
dressed to  the  American  Telephone  and  Telegraph  Com- 
pany by  the  Chicago  Tunnel  Company.     This  last  letter 
specifically  mentions  the  Chicago  Telephone  Company  as 
a  possible  purchaser  of  the  Chicago  Tunnel  Company's 
property  under  the  previous  agreements  with  the  Amer-. 
ican  Telephone  and  Telegraph  Company,  and  the  supple- 
mental memorandum   agreement  of  July  8,   1913,  also 
specifically  refers  to  the  Chicago  Telephone  Company 
and  the  right  which  the  American  Telephone  and  Tele- 
graph Company  was  to  secure  to  construct  and  connect 
conduits  between  the  tunnels  of  the  Tunnel  Company 
and  the  conduit  system  of  the  Chicago  Telephone  Com- 
pany.    It  is,  of  course,  common  knowledge  that  the  Amer- 
ican Telephone    and    Telegraph    Company  owns  a  very 


42 

large  percentage — in  the  neighborhood  of  95% — of  the 
stock  of  the  Chicago  Telephone  Company  and  that  the 
latter  is  one  of  the  subsidiary  companies  of  the  Bell  sys- 
tem of  which  the  American  Telephone  and  Telegraph 
Company  is  the  parent  company. 

Your  Committee  are  familiar  with  the  terms  of  the  pro- 
posed ordinance  submitted  to  the  City  Council  on  or 
about  July  14,  1913,  and  amending  at  one  and  the  same 
time  the  aforesaid  ordinances  of  the  Chicago  Tunnel 
Company  and  the  ordinance  of  the  Chicago  Telephone 
Company  passed  November  6,  1907,  so  as  to  permit  the 
sale  by  the  Chicago  Tunnel  Company  of  its  telephone 
plant  and  equipment  to  the  Chicago  Telephone  Com- 
pany. It  is  to  be  noted  that  this  proposed  ordinance  in- 
troduced on  behalf  of  the  parties  seeking  to  effect  this 
sale  re-enacted  Section  2  of  the  original  ordinance  of 
February  20,  1899,  but  omitted  at  the  end  thereof  the 
important  provision  above  quoted  concerning  the  right 
of  forfeiture,  and  that  this  proposed  ordinance  further 
provided  in  Section  3  thereof  that  the  Chicago  Telephone 
Company  should  hold  and  operate  the  telephone  plant  of 
the  Tunnel  Company  "free  from  all  the  conditions,  pro- 
visions, forfeitures  and  requirements  imposed  by  the 
terms  of  the  ordinances  adopted  by  the  City  Council  of 
the  City  of  Chicago  on  February  20,  1899,  and  July  15, 
1903,  together  with  all  amendments  thereto  and  all  ordi- 
nances or  parts  of  ordinances  in  conflict"  with  said  pro- 
posed ordinance.  So  that  this  proposed  ordinance  if 
passed  would  have  wiped  out  the  forfeiture  clauses  of  the 
1899  ordinance  and  the  forfeiture  clauses  of  the  1903  and 
subsequent  ordinances  so  far  as  the  same  applies  to  the 
telephone  rights,  plant  or  equipment  of  the  Chicago  Tun- 
nel Company. 

The  question  arises  for  consideration  whether  or  not 
the  Chicago  Tunnel  Company  did  not,  by  making  the 


43 

above  mentioned  contracts  with  the  American  Telephone 
and  Telegraph  Company,  the  purpose  of  which  is  made 
clear  by  the  proposed  ordinance  submitted  to  the  City 
Council,  violate  the  terms  of  the  forfeiture  clause  above 
set  forth  in  the  original  ordinance  of  February  20,  1899. 
I  am  of  the  opinion  that  the  Chicago  Tunnel  Company 
entered  into  an  agreement  with  an  existing  telephone 
company  doing  business  in  the  City  of  Chicago,  which 
agreement  tended  to  make  competition  inoperative.  I 
have  every  reason  to  believe  that  the  American  Telephone 
and  Telegraph  Company  itself  was  doing  business  in 
the  City  of  Chicago  on  the  date  of  its  agreement  with  the 
Chicago  Tunnel  Company — that  is  the  8th  day  of  July, 
1913 — and  in  reality,  as  appears  from  a  consideration 
of  the  contracts  and  the  proposed  ordinance  taken  to- 
gether, the  real  purchaser  of  the  Chicago  Tunnel  Com- 
pany's property  was  to  be  the  Chicago  Telephone  Com- 
pany, which  last  named  company,  of  course,  was  doing- 
business  in  the  City  of  Chicago  at  that  time.  That  this 
agreement  "would  tend  to  make  competition  inopera- 
tive" is  self-evident.  As  soon  as  the  Chicago  Tunnel 
Company  secured  a  contract  for  the  sale  by  it  of  its  prop- 
erty to  the  Chicago  Telephone  Company  the  "tendency" 
of  such  contract  would  be  to  diminish  any  desire  on  the 
part  of  the  Chicago  Tunnel  Company  to  push  its  efforts 
to  compete  successfully  with  the  Chicago  Telephone  Com- 
pany. It  is  not  necessary  to  find  that  all  competition 
ceased.  It  is  enough,  under  the  terms  of  the  1899  ordi- 
nance, to  find  that  there  was  a  "tendency"  to  make  com- 
petition inoperative. 


44 


CONCLUSION. 

It  would  therefore  seem  to  me  that  the  case  presented 
to  this  Committee  is  not  one  of  a  going  concern  seeking 
to  carry  out  all  of  the  terms  and  conditions  of  the  ordi- 
nances and  to  comply  with  the  obligations  thereby  im- 
posed but  rather  a  case  of  a  company  which  has  in  effect 
abandoned  all  effort  to  comply  with  the  terms  of  the  ordi- 
nances, has  admitted  the  failure  of  its  telephone  under- 
taking and  has  definitely  abandoned  the  purpose  for 
which  its  original  ordinance  was  granted — that  is,  the 
securing  of  telephone  competition  in  the  City  of  Chicago. 

In  view7  of  these  considerations  and  the  emphasis  that 
is  placed  by  some  upon  the  alleged  fact  that  the 
telephone  system  of  the  Tunnel  Company  is  a 
going  concern  it  seems  to  me  desirable  to  in- 
corporate in  the  ordinance  to  be  submitted  to  your 
Committee  appropriate  paragraphs  concerning  the  fail- 
ure of  the  Tunnel  Company  to  comply  with  the  terms  of 
the  ordinance  of  February  20,  1899,  and  concerning  its 
practical  abandonment  in  the  particulars  above  named, 
of  all  effort  to  comply  with  that  and  the  other  amenda- 
tory ordinances  relating  to  its  telephone  business.  The 
draft  of  an  ordinance  submitted  herewith  will  be  found 
to  contain  such  provisions. 

Kespectfully  submitted, 

STEPHEN  A.  FOSTER, 


45 

DRAFT  OF  ORDINANCE. 
Draft  of 

An  Ordinance  declaring  the  forfeiture  of  all  rights 
acquired  by  the  Illinois  Telephone  and  Telegraph 
Company  or  any  of  its  successors  or  assigns,  or  the 
Chicago  Tunnel  Company,  or  any  other  company  or 
person,  under  the  ordinance  passed  by  the  City  Coun- 
cil on  February  20,  1899,  together  with  the  plant  and 
equipment  for  telephone  purposes  constructed  by 
said  Illinois  Telephone  and  Telegraph  Company  or 
any  of  its  successors  or  assigns,  or  the  Chicago  Tun- 
nel Company  or  any  other  company  or  person,  under 
said  ordinance  passed  February  20,  1899,  or  any  or- 
dinance amendatory  thereof. 

WHEREAS,  on  February  20,  1899,  an  ordinance  was 
passed  by  the  City  Council  of  the  City  of  Chicago  in  and 
by  which  permission  and  authority  were  granted  to  the 
Illinois  Telephone  and  Telegraph  Company  (a  corpora- 
tion formerly  existing  under  the  laws  of  Illinois)  its  as- 
signs and  lessees,  upon  the  terms  and  conditions  in  said 
ordinance  set  forth,  to  construct,  maintain,  repair  and  op- 
erate in  the  streets,  avenues,  alleys  and  tunnels  and  other 
public  places  in  the  City  of  Chicago,  and  under  the  Chi- 
cago river  and  its  several  branches  for  and  during  the 
term  of  thirty  (30)  years  from  the  passage  of  said  ordi- 
nance a  line  or  lines  of  conduits  and  wires,  or  other 
electrical  conductors,  together  with  all  necessary  feed- 
ers and  service  wires,  or  other  electrical  conductors,  to 
be  used  for  the  transmission  of  sound,  signals  and  intel- 
ligence, by  means  of  electricity  or  otherwise ;  and, 

WHEREAS,  it  was  provided,  among  other  things,  in  and 
by  said  ordinance  that  if  said  Illinois  Telephone  and  Tel- 
egraph Company,  or  any  of  its  successors  or  assigns, 
should  either  sell  out  to  or  enter  into  any  agreement  with 
any  existing  telephone  company  or  any  of  its  successors 
or  assigns  doing  business  in  the  City  of  Chicago,  which 


46 

agreement  would  tend  to  make  competition  inoperative, 
said  ordinance  should  become  null  and  void,  and  the 
plant  of  said  company,  together  with  the  conduits,  wires 
and  poles  then  in  the  streets  belonging  to  said  company 
should  be  forfeited  to  said  City  of  Chicago ;  and, 

WHEREAS,  on  July  15,  1903,  an  ordinance  was  passed  by 
the  said  City  Council  in  and  by  which  permission  and 
authority  were  granted  to  said  Illinois  Telephone  and 
Telegraph  Company,  its  successors  and  assigns,  upon  the 
terms  and  conditions  in  said  ordinance  set  forth  to  con- 
struct, maintain,  repair  and  operate  in  and  through  tun- 
nels which  had  theretofore  been  constructed  by  said  Illi- 
nois Telephone  and  Telegraph  Company  claiming  to  act 
under  the  authority  of  the  aforesaid  ordinance  of  Feb- 
ruary 20,  1899,  or  should  thereafter  be  constructed  under 
said  ordinance  of  July  15,  1903,  or  under  said  ordinance 
of  February  20,  1899,  for  and  during  the  term  of  said 
ordinance  of  February  20,  1899,  not  only  wires  and  elec- 
trical conductors  as  provided  in  said  last  mentioned  or- 
dinance, but  also  any  appliance  or  apparatus  for  the 
transmission  and  transportation  of  newspapers,  mail 
matter,  packages,  parcels  or  merchandise ;  and 

WHEREAS,  on  July  20,  1903,  an  ordinance  was  passed 
by  said  City  Council  amending  said  ordinance  of  July  15, 
1903,  by  inserting  at  the  end  of  Section  11  thereof  a  pro- 
viso to  the  effect  that  nothing  therein  contained  should 
impair  the  obligation  of  said  Illinois  Telephone  &  Tele- 
graph Company  under  said  ordinance  of  February  20, 
1899,  to  construct  and  have  in  operation  within  five  years 
from  the  date  of  said  ordinance  of  February  20,  1899,  a 
telephone  exchange  serving  two  thousand  telephones  or 
should  vary  the  provisions  of  forfeiture  therein  con- 
tained; and 

WHEREAS,  on  June  28,  1909,  an  ordinance  was  passed 


47 

by  the  City  Council  of  the  City  of  Chicago  amending  the 
aforesaid  ordinance  passed  July  15,  1903,  and  the  ordi- 
nance amendatory  thereof  passed  July  20,  1903,  and  the 
ordinance  amendatory  thereof  passed  February  1,  1909 ; 
and, 

WHEREAS,  in  and  by  said  ordinance  passed  June  28, 
1909,  it  was  and  is,  among  other  things,  provided,  that 
if  said  Illinois  Telephone  and  Telegraph  Company,  its 
successors  and  assigns,  shall  fail  to  construct,  equip  and 
install  a  telephone  system  under  the  terms  of  said  ordi- 
nance to  said  company  of  February  20,  1899,  adequate 
for  the  services  of  20,000  subscribers  prior  to  June  1st, 
1911,  or  if  at  any  time  after  said  June  1st,  1911,  said 
company,  its  successors  and  assigns  shall  not  have  in 
operation  or  shall  cease  to  operate  a  telephone  system 
serving  20,000  bona  fide  subscribers,  then  and  in  each 
such  case  said  company,  its  successors  and  assigns,  shall 
forfeit  to  the  City  of  Chicago,  or  to  any  licensee  or  gran- 
tee of  said  City  (designated  or  authorized  by  the  City 
for  this  purpose),  all  rights  acquired  under  said  ordi- 
nance of  February  20,  1899,  together  with  its  plant  and 
equipment  for  telephone  purposes,  and  shall  forthwith 
turn  over  the  ownership  and  possesion  of  said  plant  and 
equipment  to  said  City,  or  to  any  licensee  or  grantee  of 
the  City  (designated  or  authorized  by  the  City  for  this 
purpose),  and  shall  be  under  obligations  to  furnish  said 
City,  or  to  any  licensee  or  grantee  of  the  City  (desig- 
nated or  authorized  by  the  City  for  this  purpose)  with- 
out charge,  all  space  in  any  or  all  of  its  tunnels  and  con- 
duits necessary  for  the  carrying  on  of  said  telephone 
business;  such  space  at  no  time  to  be  less  than  that  re- 
1 1 ni red  to  reasonably  accommodate  equipment  for  the 
service  of  20,000  telephone  subscribers;  and, 

WHEREAS,  in  and  by  said  ordinance  passed  June  28, 


48 

1909,  it  was  expressly  provided  that  nothing  therein 
contained  should  impair  the  obligation  of  said  Illinois 
Telephone  and  Telegraph  Company  under  said  ordinance 
of  February  20,  1899,  to  construct  and  have  in  operation 
within  five  years  from  the  date  of  said  ordinance  of  Feb- 
ruary 20,  1899,  a  telephone  exchange  serving  two  thou- 
sand telephones,  or  should  vary  the  provisions  of  for- 
feiture therein  contained  except  as  was  expressly  pro- 
vided in  said  6rdinance  of  June  28,  1909;  and, 

WHEREAS,  by  the  several  reservations  in  said  ordi- 
nances of  July  20,  1903,  and  of  June  28,  1909,  the  right 
of  forfeiture  above  set  forth  on  the  conditions  above 
stated  reserved  in  said  ordinance  of  February  20,  1899, 
has  been  expressly  reserved  and  continued  in  full  force; 
and, 

WHEREAS,  each  of  said  ordinances  was  duly  accepted 
in  writing  by  said  Illinois  Telephone  and  Telegraph  Com- 
pany and  such  acceptance  duly  filed  in  the  office  of  the 
City  Clerk  of  the  City  of  Chicago  in  accordance  with  the 
terms  and  within  the  time  limited  by  said  ordinances  re- 
spectively; and, 

WHEREAS,  the  Chicago  Tunnel  Company  has  succeeded 
to  and  acquired  all  rights  granted  or  acquired  under  the 
aforesaid  ordinance  of  February  20,  1899,  subject  to  all 
the  terms  and  conditions  contained  in  said  ordinance  and 
the  aforesaid  ordinances  amendatory  thereof,  together 
with  the  aforesaid  plant  and  equipment  for  telephone 
purposes ;  and, 

WHEREAS,  said  Chicago  Tunnel  Company  did  on  or 
about  the  8th  day  of  July,  1913,  enter  into  an  agreement 
with  the  American  Telephone  and  Telegraph  Company, 
a  New  York  corporation  engaged  in  the  telephone  busi- 
ness and  at  that  time  and  for  more  than  fifteen  years 
prior  thereto  doing  business  in  the  City  of  Chicago  and 


49 

owning  a  large  majority  of  the  stock  of  and  controlling 
the  Chicago  Telephone  Company,  a  teleph6'ne  company 
at  that  time  and  for  more  than  fifteen  years  prior  there- 
to doing  business  in  the  City  of  Chicago,  by  which  agree- 
ment said  Chicago  Tunnel  Company  agreed  to  sell  to 
said  American  Telephone  and  Telegraph  Company  and 
said  American  Telephone  and  Telegraph  Company 
agreed  to  purchase  the  telephone  plant,  system  and 
equipment  including  all  of  the  property  of  said  Chicago 
Tunnel  Company  necessary  and  suitable  to  and  used  by 
it  for  carrying  on  the  telephone  business  in  the  City  of 
Chicago,  under  certain  terms  and  conditions  in  said 
agreement  named,  which  agreement  tended  to  make  com- 
petition between  said  Chicago  Tunnel  Company  and  the 
aforesaid  telephone  companies  inoperative;  and, 

WHEREAS,  said  agreement  of  July  8,  1913,  was  subse- 
quently modified  by  memorandum  agreement  supple- 
mental thereto  dated  on  or  about  the  day  of 

October,  1913,  and  by  a  letter  of  the  Chicago  Tunnel  Com- 
pany dated  on  or  about  October  20th,  1913,  addressed  to 
said  American  Telephone  and  Telegraph  Company  and 
expressly  providing  that  in  the  event  that  the  purchaser 
of  all  or  a  part  of  the  property  above  referred  to  should 
be  the  Chicago  Telephone  Company,  the  Chicago  Tunnel 
Company  would  grant  to  said  Chicago  Telephone  Com- 
pany certain  rights  to  occupy  without  charge  for  tele- 
phone purposes  space  in  the  tunnels  of  said  Chicago 
Tunnel  Company;  and, 

WHEREAS  said  Chicago  Tunnel  Company  submitted  to 
the  City  Council  on  or  about  July  14,  1913,  an  ordinance 
amendatory  of  the  aforesaid  ordinance  passed  by  the 
City  Council  on  February  20,  1899  (and  the  ordinances 
amendatory  thereof),  and  amendatory  also  of  an  ordi- 
nance passed  November  6,  1907,  granting  to  the  Chicago 


50 

Telephone  Company  permission  and  authority  to  con- 
struct, maintain,  repair  and  operate  in  and  under  the 
public  streets,  alleys  and  other  public  places 
in  the  City  of  Chicago  and  under  the  Chi- 
cago river  and  its  several  branches,  a  system  of  wires, 
cable,  electrical  conductors,  poles  and  conduits,  for  the 
transmission  of  sounds  and  signals  only  by  means  of  elec- 
tricity, and  said  proposed  ordinance  so  introduced  pro- 
vided that  permission  and  authority  were  thereby 
granted  to  said  Chicago  Tunnel  Company  to  sell  its  tele- 
phone plant,  system  and  equipment,  including  all  the 
property  of  said  Chicago  Tunnel  Company,  necessary 
and  suitable  to  and  used  by  it  for  carrying  on  the  tele- 
phone business  in  the  City  of  Chicago  and  provided  fur- 
ther that  said  Chicago  Telephone  Company  might  be- 
come the  purchaser  thereof  and  purported  to  grant  to 
said  Chicago  Telephone  Company  permission  and  au- 
thority to  purchase  such  telephone  plant,  system  and 
equipment  of  said  Chicago  Tunnel  Company  and  to  hold, 
extend,  maintain  and  operate  the  same  in  connection  with 
its  own  telephone  plant  and  under  the  terms  of 
its  own  ordinances  from  the  City  of  Chicago  and  free 
from  all  of  the  conditions,  provisions,  forfeitures  and  re- 
quirements imposed  by  the  terms  of  the  ordinances 
adopted  by  the  City  Council  of  the  City  of  Chicago  on 
February  20,  1899,  and  July  15,  1903,  together  with  all 
amendments  thereto  and  all  ordinances  or  parts  of  or- 
dinances in  conflict  with  said  proposed  ordinance  and 
said  proposed  ordinance  further  provided  upon  the  com- 
pletion of  any  sale  and  purchase  provided  for  in  said 
ordinance  for  the  repeal  of  the  right  of  said  Chicago 
Tunnel  Company,  its  successors  and  assigns  to  build, 
maintain  and  operate  a  telephone  plant  under  the  provi- 
sions of  the  ordinances  of  February  20,  1899,  and  July 
15,  1903,  and  all  ordinances  amendatory  thereof,  pro- 


51 

vicled  that  such  repeal  should  not  affect  its  or  their  rights 
to  operate  and  maintain  otherwise  than  in  conducting  a 
telephone  system  any  tunnels  or  conduits  constructed 
under  said  ordinance  of  February  20,  1899,  then  used  as 
a  part  of  said  tunnel  system;  and, 

WHEREAS,  -the  counsel  of  said  Chicago  Tunnel  Com- 
pany acting  on  its  behalf  in  the  matter  of  the  aforesaid 
proposed  ordinance  then  pending  before  the  City  Coun- 
cil presented  to  the  Committee  on  Gas,  Oil  and  Electric 
Light  of  said  City  Council  a  statement  dated  December 
3,  1914,  and  addressed  to  said  Committee  expressly  ad- 
mitting that  the  number  of  bona  fide  subscribers  of  the 
telephone  system  of  said  Chicago  Tunnel  Company  was 
on  said  date  less  than  20,000,  and  also  admitting  that  the 
company  had  terminated  its  active  campaign  of  solicita- 
tion of  subscribers  and  admitting  its  inability  to  comply 
with  the  terms  and  conditions  imposed  upon  it  under  the 
ordinances  passed  by  the  City  Council  as  aforesaid ;  and, 

WHEREAS  said  Chicago  Tunnel  Company  has  by  the 
statements  submitted  on  its  behalf  as  aforesaid  and  by 
its  conduct  in  entering  into  the  aforesaid  agreements  with 
the  American  Telephone  and  Telegraph  Company  and  by 
seeking  authority  from  the  City  of  Chicago  as  afore- 
said under  its  proposed  ordinance  (which  has  not  been 
granted)  to  sell  its  property  to  the  Chicago  Telephone 
Company,  declared  its  inability  to  conduct  a  telephone 
business  in  the  City  of  Chicago  in  competition  with  the 
Chicago  Telephone  Company;  and, 

WHEREAS,  on  October  5,  1914,  the  City  Council  passed 
an  order  directing  the  Commissioner  of  Public  Service 
to  institute  an  investigation  to  determine  whether  the 
Chicago  Tunnel  Company  had  a  telephone  system  in  op- 
eration in  the  City  of  Chicago  serving  20,000  bona  fide 
subscribers  and  pursuant  to  the  terms  of  said  order  said 


52 

Commissioner  of  Public  Service  made  a  thorough  inves- 
tigation of  the  number  of  bona  fide  telephone  subscribers 
being  served  by  the  telephone  system  of  said  Chicago 
Tunnel  Company,  and  made  a  count  of  the  same  and 

thereafter,  on  to  wit :  the day  of  February, 

1915,  submitted  his  report  of  said  count  and  investiga- 
tion in  and  by  which  report  said  Commissioner  of  Public 
Service  found  and  reported  that  said  telephone  system 
of  said  Chicago  Tunnel  Company  was  not  serving  20,000 
bona  fide  subscribers,  and, 

WHEREAS,  said  Chicago  Tunnel  Company  (and  all  other 
corporations  or  individuals  interested  or  claiming  to  be 
interested  in  said  telephone  system  or  its  plant  and  equip- 
ment and  seeking  an  opportunity  to  appear  and  be  heard) 
have  been  given  full  and  extended  hearings  before  the 
Committee  on  Gas,  Oil  &  Electric  Light  during  the  many 
months  that  said  proposed  ordinance  submitted  by  said 
Chicago  Tunnel  Company  has  been  pending  and  the  pro- 
posed forfeiture  of  the  rights  and  telephone  plant  and 
equipment  of  said  company  has  been  under  discussion  as 
aforesaid;  Now  THEREFORE 

Be  it  Ordained  by  the  City  Council  of  the  City  of  Chi- 
cago : 

Section  1.  That  the  City  of  Chicago  does  hereby  de- 
clare that  neither  said  Illinois  Telephone  and  Telegraph 
Company  nor  said  Chicago  Tunnel  Company  nor  any 
company  or  person  operating  a  telephone  system  in  the 
City  of  Chicago  under  said  ordinance  of  February  20, 
1899,  now  has  in  operation  a  telephone  system  serving 
20,000  bona  fide  subscribers ;  and  that  the  telephone  sys- 
tem established  by  said  Illinois  Telephone  and  Telegraph 
Company  and  its  successors  is  not  now  serving  20,000 
bona  fide  subscribers  and  for  a  long  period  of  time  im- 


53 

mediately  preceding  the  date  of  the  passage  of  this  or- 
dinance and  subsequent  to  June  1st,  1911,  has  not  been 
serving  20,000  bona  fide  subscribers  and  that  said  Chi- 
cago Tunnel  Company  has  since  it  succeeded  to  the  rights 
of  said  Illinois  Telephone  and  Telegraph  Company  ceased 
to  operate  either  directly  or  indirectly  a  telephone  sys- 
tem serving  20,000  bona  fide  subscribers  and  is  not  now 
operating  either  directly  or  indirectly  a  telephone  system 
serving  20,000  bona  fide  subscribers,  and  that  said  Illi- 
nois Telephone  and  Telegraph  Company  and  said  Chi- 
cago Tunnel  Company  have  in  so  doing  violated  the 
terms  and  conditions  of  the  aforesaid  ordinances  and 
the  obligations  imposed  thereby  upon  them  as  aforesaid. 

Section  2.  That  the  City  of  Chicago  does  hereby  de- 
clare that  said  Chicago  Tunnel  Company  has  also  failed 
to  perform  and  has  violated  the  terms  of  said  ordinance 
of  February  20,  1899  and  aforesaid  ordinances  amenda- 
tory thereof  in  that  said  Chicago  Tunnel  Company  has 
entered  into  an  agreement  as  aforesaid  with  a  telephone 
company  doing  business  in  Chicago  as  aforesaid,  which 
agreement  has  tended  to  make  competition  inoperative 
and  that  said  Chicago  Tunnel  Company  in  this  and  other 
ways  as  aforesaid  has  in  effect  abandoned  its  efforts  to 
comply  with  the  obligations  resting  upon  it  under  the 
terms  and  conditions  of  the  aforesaid  ordinances. 

Section  3.  That  the  City  of  Chicago  does  hereby  de- 
clare that  all  rights  acquired  by  the  Illinois  Telephone 
and  Telegraph  Company,  or  any  of  its  successors  or  as- 
signs, or  the  Chicago  Tunnel  Company,  or  any  other 
company  or  person  under  the  ordinance  passed  by  the 
(  it y  Council  of  the  City  of  Chicago  on  February  20,  1899, 
have  become  and  are  subject  to  forfeiture;  and  that  the 
City  of  Chicago  does  hereby  elect  to  determine  and  for- 
feit all  of  the  rights  granted  by  said  ordinance  of  Feb- 
ruary 20,  1899,  and  all  rights  acquired  under  said  ordi- 


54 

nance  of  February  20, 1899,  by  the  said  Illinois  Telephone 
and  Telegraph  Company,  or  any  of  its  successors  or  as- 
signs, or  the  Chicago  Tunnel  Company,  or  any  other 
company  or  person;  and  that  the  City  of  Chicago  does 
hereby  declare  forfeited  all  rights  granted  by  said  ordi- 
nance of  February  20,  1899,  and  all  rights  acquired  by 
the  said  Illinois  Telephone  and  Telegraph  Company,  or 
any  of  its  successors  or  assigns,  or  the  Chicago  Tunnel 
Company,  or  any  other  company  or  person,  under  said 
ordinance  of  February  20,  1899,  and  all  said  rights  are 
hereby  terminated  and  forfeited  to  the  City  of  Chicago. 

Section  4.  That  the  City  of  Chicago  does  hereby  de- 
clare that  the  plant  and  equipment  for  telephone  pur- 
poses constructed  or  installed  by  said  Illinois  Telephone 
and  Telegraph  Company,  or  any  of  its  successors  or  as- 
signs, or  the  Chicago  Tunnel  Company,  or  any  other  cor- 
poration or  person,  under  the  aforesaid  ordinance  passed 
by  the  City  Council  of  the  City  of  Chicago  on  February 
20,  1899,  or  any  of  the  aforesaid  ordinances  supplemental 
thereto  or  amendatory  thereof,  have  become  and  are  sub- 
ject to  forfeiture ;  and  that  the  City  of  Chicago  does  here- 
by elect  to  forfeit  said  plant  and  equipment;  and  that 
the  City  of  Chicago  does  hereby  declare  said  plant  and 
equipment  for  telephone  purposes  to  be  forfeited  to  it, 
the  City  of  Chicago. 

Section  5.  That  the  City  of  Chicago  does  hereby  de- 
mand of  said  Chicago  Tunnel  Company  and  of  the  Illi- 
nois Telephone  and  Telegraph  Company,  a  corporation 
organized  under  the  laws  of  the  State  of  Illinois  on  or 
about  June  6,  1912,  and  of  any  and  all  companies  or  per- 
sons now  having  or  claiming  any  interest  in  or  owner- 
ship of  or  being  in  possession  of  said  plant  and  equip- 
ment so  constructed,  or  any  part  or  portion  thereof,  that 
they  and  each  of  them  forthwith  turn  over  to  the  City  of 


55 

Chicago  the  ownership  and  possession  of  said  plant  and 
equipment,  or  such  part  or  portion  thereof  as  they  re- 
spectively have  or  claim  any  interest  in  or  ownership  of, 
or  are  in  possession  of,  and  the  Commissioner  of  Public 
Works  of  the  City  of  Chicago  is  hereby  designated  and 
authorized  to  receive  and  receipt  for  the  same  as  the 
representative  of,  and  for  and  on  behalf  of,  the  City  of 
Chicago. 

Section  6.  That  the  City  of  Chicago  does  hereby  de- 
mand of  said  Chicago  Tunnel  Company  and  said  Illinois 
Telephone  and  Telegraph  Company,  which  was  -organ- 
ized on  or  about  June  6,  1912,  and  any  and  all  other  com- 
panies or  persons  now  having  or  claiming  any  interest  in 
or  ownership  of  or  being  in  possession  of  the  tunnels 
and  conduits  constructed  by  the  aforesaid  Illinois  Tele- 
phone &  Telegraph  Company  (a  formerly  existing  corpo- 
ration) claiming  to  act  under  the  authority  of  the  afore- 
said ordinance  of  February  20,  1899,  or  under  said  ordi- 
nance of  July  15,  1903,  or  said  ordinances  amendatory 
thereof,  that  they  or  either  of  them,  upon  the  turning 
over  of  the  ownership  and  possession  of  such  plant  and 
equipment  for  telephone  purposes  to  the  City,  furnish 
the  City  of  Chicago  or  any  licensee  or  grantee  of  the  said 
City  (that  may  be  designated  or  authorized  by  the  City 
for  this  purpose)  without  charge,  all  space  in  any  or  all 
of  said  tunnels  and  conduits  necessary  for  the  carrying 
on  of  said  telephone  business;  such  space  at  no  time  to 
be  less  than  that  required  to  reasonably  accommodate 
equipment  for  the  service  of  20,000  telephone  subscribers. 

Section  7.  That  the  Commissioner  of  Public  Works  of 
the  City  of  Chicago  be  and  he  is  hereby  authorized  and 
directed  to  deliver  or  cause  to  be  delivered  a  duly  certi- 
fied copy  or  copies  of  this  ordinance  to  the  said  Chicago 
Tunnel  Company  and  the  said  Illinois  Telephone  and 


56 

Telegraph  Company,  which  was  organized  on  or  about 
June  6,  1912,  and  to  any  and  all  other  companies  or  per- 
sons, if  any  known  to  him,  now  having  or  claiming  any 
interest  in  or  ownership  of  or  being  in  possession  of  said 
plant  and  equipment  or  any  part  or  portion  thereof. 

Section  8.  That  the  Corporation  Counsel  of  the  City 
of  Chicago  be  and  he  is  hereby  authorized  and  directed 
to  take  such  action  as  he  may  deem  proper  and  advisable 
to  enforce  the  forfeiture  declared  in  Section  2  and  to  en- 
force the  forfeiture  of  said  plant  and  equipment  declared 
in  Section  4  of  this  ordinance,  and  to  enforce  the  rights 
of  the  City  of  Chicago  in  the  premises  and  the  right  of 
the  City  of  Chicago  to  all  space  in  the  aforesaid  tunnels 
and  conduits  necessary  for  the  carrying  on  of  said  tele- 
phone business. 

Section  9.  That  the  invalidity  of  any  portion  of  this 
ordinance  shall  not  affect  the  validity  of  any  other  por- 
tion thereof  which  can  be  given  effect  without  such  in- 
valid part. 

Section  10.  This  ordinance  shall  take  effect  and  be  in 
force  from  and  after  its  passage  and  due  publication. 


GIONAL  LIBRARY  F 


000  787  179 


LIBRARY 
PUBLIC  AFFAIRS  SERVICE 

SEP  2  2  1980 

UNIVERSITY  OF  CALIFORNIA 
LOS  ANGELES 


